UK Becomes a Bond-Market "Safe Haven", Boosting Burnham
Britain is increasingly being treated as a “safe haven” by bond investors, according to a report, handing Andy Burnham’s government an unexpected boost ahead of the autumn Budget. Demand for UK government debt has firmed even as other markets wobble. It offers the Chancellor a little more room as he prepares difficult decisions.
A reputation as a haven for nervous investors is a welcome turn for a government braced for a tough Budget, since stronger demand for gilts helps hold down the cost of borrowing. Global jitters, and bets that interest rates will fall after a weak US jobs report, have burnished the appeal of UK debt. But the reprieve is fragile: confidence can evaporate quickly if the public finances look shaky or promises go unfunded. The Chancellor, John Healey, still faces hard choices on tax and spending in October. Watch whether the calm in the bond market lasts through the Budget.