Rachel Reeves confirmed on her trip to Washington DC that she will be changing the government’s self-imposed fiscal rules, allowing the Chancellor to borrow up to £50 billion more for infrastructure investment in Britain. The change – which will take into account the government’s assets – will further loosen what are already quite loose rules created by Rishi Sunak and Jeremy Hunt, which aimed to get debt falling as a percentage of GDP by the end of a five-year rolling period.
It’s no surprise then that international markets are a little nervous. While plans to change the fiscal rule have been floated for over a month now – giving investors time to prepare and adjust – the 10-year gilt yield still rose today to 4.26
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