Nandy was speaking to the bond traders this morning when she brought up the Winter Fuel Allowance cut – unprompted – to try to prove Labour was serious about controlling spending. She said on the Today Programme:
“We’re not going to borrow for day-to-day spending… the last few times that I’ve been on your programme… we’ve been talking about the winter fuel allowance, we ‘ve been talking about the difficult decisions that we’ve had to make in order to make sure that we stabilise the economy.”
While the Treasury fires out briefings that Reeves is “prepared to reduce departmental spending even more than planned, having ruled out increases to either borrowing or taxes,” gilt yields have risen this morning for the fifth consecutive day. 10 and 30-year gilts have seen early sell-offs this morning…
Goldman Sachs predicts this morning that the UK economy will only grow by 0.9% this year – that’s compared to the 2% OBR prediction at the Budget. They are pricing in high, sticky yields:
“We expect higher yields to act as an additional headwind to growth via household remortgaging and weaker investment, with the increase of the last few days worth around 0.1 percentage point of additional growth drag this year.”
Pound sterling continues to decline. Deutsche Bank meanwhile in part blames “the combination of sluggish growth and above-target inflation” for the yield spike. Reeves will be reading all this on her flight to Shanghai…
Sarah Pochin at Reform Scotland’s manifesto launch event: “I really wanted to come on in a Reform tartan burka, but apparently I wasn’t allowed… One day let’s do one of these events not live-streamed. We’ll do all the naughty stuff…”