The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookiesbefore using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Gilt trip: Bank of England steps in to clear up UK’s self-inflicted bond market rout

Clearing up after the government’s mess will only provide a short break in the repricing of UK risk.

Chancellor Of The Exchequer Kwasi Kwarteng Delivers His Mini Budget
Carl Court/Getty Images

The speed with which UK financial markets fell into dysfunction this week is astonishing. The country’s finance minister announced on Friday an unusual budget combining high spending commitments, generous tax cuts and an uncorroborated assertion that these would lead to a new era of 2.5% annual growth.

The UK hasn’t been close to that since the easy borrowing days in the run up to the great financial crisis.

Back then, it was financed by abundant taxes from a swollen industry of banks declaring fake profits from dealing in synthetic products, often with virtual customers that were really themselves.

Those days are long gone and they are not coming back, even if bankers’ bonus caps are removed. Bank shareholders won’t allow a return.

By taking the same dismissive attitude to the international lenders on which it depends as it does to parliament and the electorate and not bothering to show its workings, the government caused the currency to fall and sovereign bond yields to rise sharply.

On Monday and Tuesday, markets in long-dated government bonds came close to collapse in a way that threatened immediate contagion to the real economy.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?