Two City analysts warn that the Chancellor's roughly £15bn of Budget headroom could be wiped out by a rise in gilt yields. The warnings follow Andy Haldane's on Sunday about the risk of a gilt market shock.
Nigel Green, chief executive of deVere Group, said half a point on gilt yields could burn through up to half of the £15bn buffer, according to Financial Mirror. He said each quarter-point rise is estimated to cut £2.5bn to £4bn from the headroom. He did not say whose estimate that is.
David Rees, chief economist at Schroders, said a rise of 1.0 to 1.5 percentage points in yields could eliminate the remaining headroom, Asia Asset Management reports.
These are analysts' estimates, not OBR or Treasury figures, and they have not been independently checked.
"Gilts held steady because they got exactly what they expected. Nobody should mistake that for confidence"
Green made those remarks on 30 October. The 10-year gilt yield fell two basis points to 5.323% in afternoon trading on Budget day, Asia Asset Management reports, citing Reuters. Financial Mirror, citing deVere, reports that the 10-year yield reached 5.53% in October, its highest since 2007, and that the 30-year yield broke 6%.