Five ways it’s about to get even worse for Rachel Reeves

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For Rachel Reeves, a rewrite may be required – Things Can Only Get Worse.The Chancellor has set the clock ticking on her second Budget, announcing that it will be held on Nov 26.Reeves is already under pressure, with bond yields rising and the pound weakening. Speculation is rife over which taxes will have to go up to fill yet another black hole. As things stand, economists believe she will need to find £20bn or more to restore the public finances to health.The Chancellor will be hoping that things will improve between now and the Budget.Perhaps the turmoil in financial markets will ebb. Perhaps the Government will find some new productivity-boosting wheeze to convince the Office for Budget Responsibility (OBR) to upgrade its growth forecasts.Yet on current trends, things look more likely to get worse than better. Here are five reasons why the Chancellor should be wary.Interest rates on 30-year UK bonds are currently at highs not seen since 1998, meaning the Government must pay handsomely for the borrowing it sorely needs.This is not like 2022, when a spike in bond yields in the wake of the mini-Budget brought down Liz Truss’s government.Then, borrowing costs subsided after Truss changed tack and, eventually, resigned.This time around, other nations are also seeing steady rises in bond yields, indicating that debt is getting more expensive globally. It suggests there there is little room for any serious relief in the weeks to come.In the spring, the OBR drew up its forecasts just as borrowing costs briefly dropped back, not quite helping Reeves out of a hole but at least limiting its depth.This time around, the figures are moving the wrong way, worsening her predicament. Alex Kerr at Capital Economics estimates that the rise in the yield since the Spring Statement will cost the public purse an extra £5.8bn per year.High borrowing costs are being locked in at an alarming rate. Yesterday, the Debt Management Office (DMO) raised £14bn in its biggest gilt sale ever. It locks in the painful 4.88pc borrowing cost for the next decade.More is to come – much more. The DMO has borrowed £144bn in the bond markets since April, just under half of the £299bn of gilts it expects to issue this financial year.Borrowing costs are rising internationally, as governments across the world rack up extraordinary debts – extending their financial crisis and pandemic-era spending sprees into seemingly permanent fiscal black holes.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,519.00 +8.25 (+0.13%)Dow Futures45,712.00 +24.00 (+0.05%)Nasdaq Futures23,725.00 +57.00 (+0.24%)Russell 2000 Futures2,383.20 -0.10 (-0.00%)VIX15.30 -1.05 (-6.42%)Gold3,611.30 +4.60 (+0.13%)PortfolioSign in to access your portfolioSign inTop gainersAEO American Eagle Outfitters, Inc. 18.79 +5.17 (+37.96%)CIEN Ciena Corporation 116.92 +22.10 (+23.31%)SNDK Sandisk Corporation 62.50 +9.49 (+17.90%)OPEN Opendoor Technologies Inc. 5.96 +0.83 (+16.18%)MLYS Mineralys Therapeutics, Inc. 33.12 +3.87 (+13.23%)Top losersFIG Figma, Inc. 54.56 -13.57 (-19.92%)AGIO Agios Pharmaceuticals, Inc. 36.13 -4.48 (-11.03%)SMR NuScale Power Corporation 36.03 -4.39 (-10.86%)TMC TMC the metals company Inc. 5.12 -0.55 (-9.70%)BLSH Bullish 49.01 -5.25 (-9.68%)Most activeOPEN Opendoor Technologies Inc. 5.96 +0.83 (+16.18%)NVDA NVIDIA Corporation 171.66 +1.04 (+0.61%)AEO American Eagle Outfitters, Inc. 18.79 +5.17 (+37.96%)SOUN SoundHound AI, Inc. 13.29 +0.55 (+4.32%)RIVN Rivian Automotive, Inc. 13.70 -0.74 (-5.12%)Earnings eventsMy earnings eventsEarnings eventsTrending tickersAVGO Broadcom Inc. 306.10 +3.71 (+1.23%)LULU lululemon athletica inc. 206.09 +7.56 (+3.81%)OPEN Opendoor Technologies Inc. 5.96 +0.83 (+16.18%)DOCU DocuSign, Inc. 76.24 +0.34 (+0.45%)PATH UiPath Inc. 10.85 -0.03 (-0.28%)Top economic events