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Surge in UK Borrowing Costs Halves Government’s Fiscal Headroom

Source: Bloomberg

Sovereign Debt & RatingsFiscal Policy & BudgetInterest Rates & YieldsMarket Technicals & Flows

UK Prime Minister Andy Burnham faces a £12 billion fiscal problem after a global selloff in government bonds worsened Britain’s already weak public finances. The bond turmoil implies higher refinancing risk and tighter funding conditions for the sovereign. The situation is likely to pressure UK rate expectations and raise concerns about the government’s budget flexibility.

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