EU Fiscal Policy

UK gilt yields have climbed to levels not seen since the 1990s, part of a global bond selloff that has pushed 30-year U.S. Treasury yields above 5%. Services inflation remains stubbornly above 3% annually while the Iran conflict has driven gasoline costs sharply higher. G7 Paris meetings and U.S.-China tariff reductions offer partial relief but leave structural inflation pressures unresolved.

UK government bond markets reacted negatively to Spring Statement preparations as the Iran conflict pushed oil and gas prices higher, threatening renewed inflation pressure. Chancellor Rachel Reeves faces mounting fiscal pressures with debt at unsustainable levels, while geopolitical shocks complicate European budgetary planning.