Overview
- The thinktank estimates UK gilt yields ran 0.4 to 0.8 percentage points above peers since the 2024 election, adding £2bn to £7bn a year to interest costs.
- Yields have fallen in recent weeks, with 10-, 20- and 30-year gilts dropping around 20 basis points more than comparable moves overseas after the chancellor’s recent statements.
- Treasury officials stress fiscal rules are binding, project borrowing to halve over the parliament, and say this year’s borrowing is the lowest in six years as a share of GDP with headroom at about £21.7bn.
- IPPR links the earlier premium to doubts over delivering deficit cuts and to the Bank of England’s gilt sales, noting 30-year yields had risen 4.1 percentage points since 2022—about 150 bps more than the US and 100 bps more than the eurozone.
- With interest payments around £92bn this year, IPPR says further yield declines could save billions and urges the Bank to stop active gilt sales and the DMO to curb long-dated issuance.