Gilt Yields

Lord Watts Excerpts

Tuesday 2nd September 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. As I have said, recent gilt yields have risen in line with global peers, mainly driven by global factors. Recent gilt market moves have been orderly; the gilt market is deep and liquid, with a good track record in responding smoothly to volatility in levels of gilt supply. Underlying demand for the UK’s debt remains strong, with a well-diversified investor base. It is most important that I stress that our commitment to the fiscal rules is non-negotiable and we have put the public finances on a sustainable path.

[Lord Watts (Lab)]

My Lords, can the Minister remind the House what the bond market thought of the previous Government’s economic policy, especially the Truss element of it?

[Lord Livermore (Lab)]

My noble friend is obviously right to draw attention to the previous Government’s disastrous economic policies. He knows that, as I have said, the Government do not comment on specific financial market moves, but he will also know that current conditions in gilt markets are completely different from those experienced at the time of the Liz Truss mini-Budget. Then, severe volatility in gilt yields caused instability in the pension fund sector and dysfunction in gilt markets. This led the Bank of England to have to intervene on financial stability grounds to restore market functioning. Recently, gilt yields have risen in line with global peers, mainly driven by global factors, and these market moves have been orderly.

As my noble friend draws attention to, when Liz Truss crashed the economy, long-dated bonds were most significantly impacted due to market dysfunction caused by unfunded tax cuts, unrealistic spending plans and the undermining of institutions that are crucial to economic stability, namely the Treasury, the OBR and the Bank of England. This pushed up mortgage costs by £300 a month, for which working people are still paying the price.