UK Rout Deepens as Reeves Budget Worries Spread Across Markets
- Short-dated yields surge as market prices fewer BOE rate cuts
- Investors point to inflationary impact of new fiscal stimulus
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UK bonds, stocks and the pound tumbled as investors dumped British assets in a swift rebuke of the new Labour government’s willingness to run up borrowing and risk faster inflation.
The selloff propelled short-term borrowing costs to their highest level since May as investors priced in fewer interest-rate cuts from the Bank of England in response to Chancellor Rachel Reeves’ Wednesday budget. The rates repricing sent ripples across UK assets, with the FTSE 250 Index suffering its worst day since early August and the pound falling against all major peers.