The British government is struggling to deal with deep-seated doubts about its fiscal position. This week, the 30-year UK Treasury yield hit 6% for the first time since 1998, while the 10-year Treasury yield was 5.4%, ranking among the highest in developed markets. This partly reflects historically high interest rates and stubborn inflation. The UK Insight Report “30 basis point premium plagues UK treasury bonds, Burnham should be alert” suggests that the benchmark bond has an additional “trustworthiness premium” of about 30 basis points to cover past policy mistakes, shocks, and profligate spending.

The British government is struggling to deal with deep-seated doubts about its fiscal position. This week, the 30-year UK Treasury yield hit 6% for the first time since 1998, while the 10-year Treasury yield was 5.4%, ranking among the highest in developed markets. This partly reflects historically high interest rates and stubborn inflation. The UK Insight Report “30 basis point premium plagues UK treasury bonds, Burnham should be alert” suggests that the benchmark bond has an additional “trustworthiness premium” of about 30 basis points to cover past policy mistakes, shocks, and profligate spending.