Sterling: Rise in Yields on 30-year Gilts

Lord Morse Excerpts

Tuesday 14th January 2025 Lords Chamber

[Lord Livermore (Lab)]

My noble friend is absolutely right and I echo his comments about the Chancellor of the Exchequer. There are limits to what she can do, but she is absolutely able to focus on the priorities of this Government. As noble Lords will know, this Government inherited a £22 billion black hole in the public finances left by the previous Government. She has taken very difficult decisions to deal with it, every single one of which has been opposed by the party opposite. However, they were the right decisions because we had to repair the public finances and ensure fiscal responsibility. She has set extremely tough fiscal rules—tougher than those of previous Governments—again, opposed by the party opposite. Meeting those fiscal rules is non-negotiable because we will not compromise on economic stability.

[Lord Morse (CB)]

My Lords, does the Minister recognise that the current rise in gilt prices, viewed alongside the market reaction to Liz Truss’s mini-Budget, shows that current market confidence in the UK can be fairly described as fragile? Does he also agree that any Government, of whatever political stripe, is likely to sow the wind and reap the whirlwind if they implement policies that ignore business confidence and stability?

[Lord Livermore (Lab)]

The noble Lord will be aware that financial markets are always evolving. It is a long-standing convention that the Government do not comment on specific financial market movements. He mentioned the Liz Truss mini-Budget, which crashed the economy. Current conditions are very different from then, when long-dated bonds were most significantly impacted due to market dysfunction. That market dysfunction was caused by unfunded tax cuts, unrealistic spending plans and undermining the institutions that are crucial to economic stability: the Treasury, the OBR and the Bank of England. It pushed up mortgage costs by £300 a month, for which working people are still paying the price. Yet there is still no apology from the party opposite, which, instead, tries to defend it.