Former Prime Minister Liz Truss is warning that surging UK gilt yields could force the Labour government into emergency spending cuts. UK 30-year gilt yields climbed to 5.89% in early September 2026, their highest level since 1998, while 10-year yields exceeded 5.2%. Analysts estimate the current yield environment could strip between £9 billion and £14 billion from the Chancellor’s fiscal headroom ahead of the October 28 budget. Asset managers including Rathbones have already reduced their exposure to long-dated gilts as bond vigilantes demand credible fiscal discipline from Prime Minister Keir Starmer’s government.
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