FX.co ★ UK Bond Yields Edge Down after Spring Budget

The yield on the UK's 10-year government bonds, known as gilts, has dipped below 4.75% as market participants evaluate the details of the latest Spring Budget. According to the UK's Debt Management Office, the government plans to issue £299.2 billion in bonds for the fiscal year commencing in April. This amount is £2 billion more than the originally planned issuance for the current fiscal year but falls short of the anticipated £304 billion.

British Finance Minister Reeves has indicated that UK inflation is anticipated to average 3.2% in 2025, a rise from the previously forecasted 2.6% in October. In February, the annual inflation rate in the UK decreased to 2.8%, slightly below the predicted rate of 2.9%, yet consistent with the forecasts from the Bank of England.

Additionally, the government has adjusted its growth forecasts, reducing the 2025 outlook to 1% from 2%. However, they've revised growth projections upwards for subsequent years: 1.9% for 2026 (from 1.8% projected in the autumn), 1.8% for 2027 (from 1.5%), 1.7% for 2028 (from 1.5%), and 1.8% for 2029 (from 1.6%).