Never has Rachel Reeves been so glad to be so boring. The Chancellor will deliver today her spring update on the public finances at a time of unusual calm in the often overdramatic story of UK economic policy. One of the biggest actors in the story, the bond market, is currently happy and sleepy.

In effect, the government’s plans assume a period of austerity just as the next election approaches

In effect, the government’s plans assume a period of austerity just as the next election approaches

After several years in which movements in government borrowing costs dominated the political conversation, calm has returned. Recent official data suggests that Reeves is under less fiscal pressure than she was in 2025. Tax receipts are up and the Treasury expects to borrow a bit less this year than last. 

This is a welcome change. Not so very long ago, Westminster was full of amateur bond analysts chattering about the yield curve and the difference between the ten-year and the 30-year. Yet now, gilt markets are calm – the yield on the ten-year is back to autumn 2024 levels – and Westminster’s sages have moved on to become instant experts in geopolitics and Persian history. Bonds are boring again, thank goodness.

We should all enjoy this period of peace, however. Looking further ahead, trouble around UK borrowing and bond markets is likely to return.

This may be surprising to politicians and voters consumed with ‘the cost of living’ but bond investors are today relatively relaxed about Britain because of what they see as a positive situation with inflation. 

Inflation has fallen sharply from its peak. Expectations of future price growth have eased, and the outlook for inflation now looks broadly benign. The Bank of England forecasts inflation will settle close to its 2 per cent target over the next........

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