Reeves Cost-of-Living Fiscal Headroom Recovers Further as Gilt Yields Slip Below 5%
Chancellor Rachel Reeves’s cost-of-living package recovers further in the Wednesday-open macro backdrop as gilt yields slip below the 5% line for the first time since Friday. UK 10-year gilt yields are at 4.98%; Brent crude is steady at $94.10 after Tuesday’s 4% slide. Friends of Reeves believe there is a world in which she survives a Burnham premiership; the Wednesday open eases that calculation further. One Labour MP close to Reeves: “The biggest fear for the bond markets and the unions is Ed Miliband.”
The 5p fuel-duty extension cancellation is locked until 31 December 2026. Inflation has slowed to 2.8% — the lowest in over a year. If Brent stays in the $88-95 range through mid-June, the inflation-easing path through the second half of 2026 holds. The October Ofgem price-cap reset would absorb most of the July 13% hike on a sustained Brent decline. The Bank of England MPC’s rate-cut path is back on track. The Treasury’s fiscal-headroom calculation eases directly with the gilt-yield retracement below 5%. Burnham’s allies have floated Energy Secretary Ed Miliband as his potential chancellor; Reeves’s allies counter that Miliband “would not be trusted by the bond markets”.