Rise in UK borrowing costs could push Reeves to new public spending cuts
Rachel Reeves could be forced to make fresh cuts to public spending at her March “spring forecast” as a rise in government borrowing costs risks the chancellor breaking her own fiscal rules.With the government under pressure on the economy, City analysts warned that Britain’s long-term borrowing costs hitting the highest level since 1998 risked wiping out almost all of a £10bn buffer the chancellor had kept in reserve at the autumn budget.The yield – in effect the interest rate – on UK 30-year debt rose by 0.4 percentage points to 5.22%, above the peak reached after Liz Truss’s mini-budget in 2022 sparked turmoil in financial markets, to hit the highest level in 27 years.
Government borrowing costs have risen worldwide in recent weeks as investors weigh up the prospect of stubbornly high inflation forcing the world’s most powerful central banks to hold back from cutting interest rates.Investors also fear the US president-elect Donald Trump’s policies could further stoke inflationary pressures.Growth in the UK is on track to have flatlined in the second half of last year, while inflation remains above the Bank of England’s 2% target – limiting its scope to cut borrowing costs.Economists said if the recent rise in bond yields was sustained, it would add to the government’s debt servicing costs and could lead the Office for Budget Responsibility (OBR) to judge that Reeves was on course to break her fiscal rule to balance day-to-day spending with taxes by 2029-30.“It suggests that the recent rise in borrowing costs has wiped out £8.
9bn of the chancellor’s £9,9bn headroom,” said Ruth Gregory, the deputy chief UK economist at the consultancy Capital Economics,While as little as £1bn would be left after the latest gyrations in bond markets, a further increase in 20-year borrowing costs of only 0,06 percentage points would wipe out all of the headroom,“This means Reeves could soon face a nasty choice of breaking her fiscal rules or announcing more tax rises and/or spending restraint at a time when the economy is already weak,” Gregory added.
Reeves is expected to present updated OBR forecasts on the economy and public finances to parliament on 26 March,She has signalled she is unlikely to announce tax and spending changes, saying she is committed to one major fiscal event a year to give families and businesses more stability,City analysts have questioned whether the chancellor would pass up an opportunity to take corrective action in the event of a damning OBR verdict – stoking speculation that Reeves could raise taxes,However, the chancellor has committed not to raise taxes any further after announcing £40bn of revenue-raising measures in her autumn budget,The Treasury said on Tuesday that her fiscal rules were non-negotiable, signalling that if any adjustments were made they would come through spending cuts.
“We are not going to pre-empt the OBR’s forecast; however, no one should be under any doubt of the chancellor’s commitment to economic stability and sound public finances.That is why meeting the fiscal rules is non-negotiable,” a Treasury spokesperson said.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotion“The chancellor has been clear that she would not repeat the likes of October budget and is now focused on rooting out waste in public spending through the spending review and growing the economy.”The rise in long-term borrowing costs came as the Treasury’s Debt Management Office sold £2.25bn of new 30-year bonds at a yield of 5.
2%, the highest level for a 30-year gilt yield since May 1998 when Gordon Brown was the chancellor,The Bank had forecast zero growth in the UK economy in the final three months of 2024 and has warned inflation is set to remain above its 2% target until at least 2027,The economy shrank for a second month in October, while revised figures show zero growth in the third quarter,Investors have pared their bets for deeper rate cuts from the central bank, with financial markets now anticipating only two reductions in 2025, compared with as many as four a couple of months ago,US 10-year bond yields rose to an eight-month high on Tuesday amid investor concerns over Trump’s policies and ahead of a Treasury auction of $39bn (£31.
2bn) of new debt.Eurozone borrowing costs have also risen after figures this week showed inflation jumped to 2.4% in December, dampening expectations for a large rate cut from the European Central Bank later this month.
UK Athletics charged with manslaughter over Paralympian’s death
UK Athletics has been charged with corporate manslaughter over the death of a Paralympian who was hit on the head by a metal pole while preparing the London World Para Athletics Championships in 2017. Keith Davies, the head of sport for the championships, also faces charges of gross negligence manslaughter after the pole, which was attached to a throwing cage, fell on Abdullah Hayayei while he was training.UKA and Davies have also been charged with a health and safety offence over the incident, which occurred at the Newham Leisure Centre in east London.Emergency services were called to the venue but the 36-year-old from the United Arab Emirates was pronounced dead at the scene 20 minutes later.Malcolm McHaffie, head of the CPS Special Crime Division, said: “Following a review of the evidence provided by the Metropolitan Police Service, the Crown Prosecution Service has authorised criminal charges against UK Athletics Limited and a 77-year-old man following the death of United Arab Emirates Paralympian Abdullah Hayayei
Baltimore Orioles announce death of ‘cherished teammate’ Brian Matusz at age of 37
The Baltimore Orioles have confirmed the death of their former pitcher, Brian Matusz, at the age of 37. The team did not give a cause of death.“Our hearts are heavy tonight as we mourn the passing of former Oriole, Brian Matusz,” the team said in a statement on Tuesday night. “A staple in our clubhouse from 2009-2016, Brian was beloved throughout Birdland, and his passion for baseball and our community was unmatched. He dedicated his time to connecting with any fan he could, was a cherished teammate, and always had a smile on his face
England’s Feyi-Waboso in dilemma over surgery for sake of Lions ambitions
England’s Manny Feyi-Waboso is still in two minds about whether to undergo a shoulder operation that could affect his chances of British & Irish Lions selection later this year. The Exeter wing is scheduled to have surgery next week which would see him miss the entire Six Nations but has yet to reach a final decision.Rob Baxter, Exeter’s director of rugby, says the 22-year-old has not yet ruled out having rehab work on the dislocated shoulder he suffered against Sale last month and delaying an operation until later in the year. A decision will need to be taken imminently, however, with Baxter suggesting that lengthy discussions between club and country have already delayed the recovery process.“Basically he’s got an operation date booked in but until that operation happens he’s still working very hard rehabbing his shoulder,” revealed Baxter
Peter Hain urges South Africa to protest Afghanistan game at Champions Trophy
The veteran anti-apartheid campaigner Peter Hain has called on Cricket South Africa to challenge the ban on women’s and girls’ cricket in Afghanistan. In a letter seen by the Guardian, Lord Hain urges Cricket South Africa’s chief executive, Pholetsi Moseki, to take up the issue with the International Cricket Council before South Africa’s Champions Trophy match against Afghanistan in Karachi on 21 February.In a particularly striking passage, Hain draws a direct parallel to apartheid with the Taliban’s oppression of women’s rights in Afghanistan. “Having struggled long and hard for black and brown cricketers to represent their country like whites did exclusively for nearly a century, I hope that post-apartheid South African cricket will press for similar rights for all women in world cricket,” Hain tells Moseki. “Will South African cricket please raise the plight of Afghan women cricketers in the ICC and express firm solidarity with Afghan women and girls who wish to play?”Hain, who rose to prominence by challenging the South African rugby and cricket tours during the early 70s, reminds Moseki that female participation in sport has been outlawed since the Taliban’s return to power in 2021
The Spin | ‘Deep, minging, unpleasant’: cricket’s flooding problem is getting worse
ECB has been in touch with 27 clubs so far this storm season as the climate crisis bites. What can game do to stay afloat?The water started flowing into the New Road practice area at about 4pm on Monday afternoon, and just kept on rolling. It flooded the entire ground and half the car park, as well as the nearby racecourse, the rowing club and the public footpath – which is now a popular hang-out space for swans. The head groundsman, Stephen Manfield, a man of a remarkably perky disposition, sits on the balcony of the club’s sports bar watching the fourth flood of the off-season do its business, the water coming in from the burst banks of the Severn as well as round the back across the fields. For the benefit of Spin readers he pokes his measuring stick into the water – “four and a half feet in the shallow end”, and still rising
Can the New York Rangers be saved? Maybe not this current version
It’s possible that the 2024-25 Rangers haven’t quite bottomed out, but it feels like they’re close. Barring an unprecedented turnaround, a painful rebuild loomsOn 25 November, the New York Rangers had a 12-6-1 record. With 25 points, the Rangers sat in fourth place in the Metropolitan Division, holding a playoff wildcard place. The team had just completed a swing through the Pacific Division, where they won against San Jose and Seattle before dropping two in a row to Calgary and Edmonton. As the Rangers headed back to New York City from their western road trip, there were rumblings of trouble, for at some point during that week, Rangers general manager Chris Drury had sent a memo to all NHL teams in which he said he was open to a trade to shake up his roster
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