UK bond yields fall after chancellor’s tax comments
UK government borrowing costs have dropped today, after chancellor Rachel Reeves indicated she could raise taxes in the budget.
The yield, or interest rate, on 10-year UK gilts has dropped by 4 basis points to 4.54%, down from 4.58% last night.
Longer-dated borrowing costs are also lower, with the yield on 30-year gilts dropping by 3 basis points to 5.35%.
Yields, which measure the rate of return on a bond, fall when bond prices rise in the markets.
Bond traders will have noted Reeves’s comments to Sky News that “Of course, we’re looking at tax and spending as well,” when explaining her approach to closing UK’s fiscal black hole in her November budget.
Those comments could reassure the City that the government really is committed to sticking to its fiscal rules, rather than allowing borrowing to rise even higher than planned…
Key events
Analysts at Investec say tax rises are Rachel Reeves’s only ‘way out’ of the fiscal black hole.
They told clients that the government may be forced to break its manifesto commitments (it pledged not to increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT).
They told clients today:
Longer-term we suspect that the government will attempt to make savings on welfare expenditure, but this sits uncomfortably with backbench MP rebellions on attempts to scrap Winter Fuel Payments and on the Welfare Bill.
For now, lifting taxation remains the only way out. But even here it is limited by its election manifesto pledges not to increase Corporation Tax, VAT, employees’ National Insurance Contributions or the basic, higher or additional rates of income tax. Taking measures such as freezing personal allowances, limiting tax relief on pension contributions and reforming Stamp Duty Land Tax could raise considerable sums.
The risk is clear though that the sum of all that is politically feasible from measures such as these is not sufficient, and that the government retreats from some of its manifestos promises to tap into more substantive revenue rises.
Osborne: UK has missed the boat on crypto
Lauren Almeida
Former chancellor George Osborne has said the UK has “missed the boat on crypto” in the 10 years since he left government.
Osborne, speaking at a forum hosted by the cryptocurrency platform Coinbase, said:
“Britain has missed the boat on the crypto, and other jurisdictions have kind of taken a lead, for example, in the Middle East or in Asia.
“I think there was a kind of laziness that said, well, the US is so hostile that we can just be a little bit less hostile.
“This is not a partisan point, this was true of previous successor governments and various Conservative prime ministers.
“They kept saying, we’re going to do lots of things for crypto and then this Labour government came in and said: we’re going to be all for innovation. And nothing happened…until very, very recently retail customers can’t get a Bitcoin ETF.”
“The UK is sitting way behind the US and that is not the right place for us to be.
“In the last few weeks, you’ve begun to hear from the Chancellor, from the governor of the Bank of England, from the [Prudential Regulatory Authority] and the [Financial Conduct Authority] in particular, a kind of more ambitious approach. And I think that’s a good thing.”
Osborne, who is a member of Coinbase’s advisory council, served as chancellor in the coalition government between 2010 and 2016.
This summer he wrote in the Financial Times that the UK was at risk of being left behind in the crypto space.
Speaking to cryptocurrency professionals in the City this morning, he added the UK had “allowed in all sorts of areas regulators that become too disconnected from what the collective government is trying to achieve”.
Rachel Reeves has welcomed today’s proposals to force vets to cap prescription prices.
Welcome news for millions of pet owners that they could save hundreds every year on their vet bills.
I will carefully consider the CMA’s findings to make sure that the sector is working for pet owners, working for vets, and working for business. https://t.co/aG8VQifKTu
— Rachel Reeves (@RachelReevesMP) October 15, 2025
Andy Haldane, the former Bank of England chief economist, has a new role.
He’s just been elected the next President of the British Chambers of Commerce (BCC) taking over from Martha Lane-Fox.
BCC members elected Haldane at their Annual General Meeting today. He will take up the role on Sunday 1 February 2026, a month after Baroness Lane-Fox steps down.
The BCC is a network of accredited Chambers of Commerce across the UK, representing businesses across the country – a role which grew in importance after the recent crisis at the CBI.
Haldane says:
“The Chambers have been celebrating and supporting the brilliance of British business for many decades. Yet their role has never been more important than it is today. I am hugely looking to working with the BCC and its members to bring even more of the dynamism the UK needs to flourish, domestically and internationally.”
Haldane, a man who can be relied upon for a punchy quote, has been busy since leaving the Bank. He founded the charity Pro Bono Economics, is chair of the National Numeracy Leadership Council, Ambassador Patron of National Numeracy and Speakers for Schools, chair of the Advanced Manufacturing Research Centre’s Industrial Board and a member of the Advisory Board of the Bradford Literature Festival and the South Yorkshire Mayor’s Economic Advisory Council.
He was formerly the Chief Executive of the Royal Society of Arts (RSA), before announcing in February he was retiring to take a break…
Bank of America profit rises on investment banking boost
Back in the banking world… Bank of America has reported a jump in profits, lifted by an increase in its fees.
BofA grew its net income to $8.5 bn in July-September, up from $6.9bn in the third quarter of 2024.
The increase included a 43% surge in investment banking fees, which hit $2bn in the quarter.
Revenues from consumer banking grew 7%, while revenues at BofA’s Global Wealth and Investment Management arm jumped 10% thanks to higher asset management fees (lifted by the rise in stock market valuations).
The pound is having a better day against the US dollar, as risk sentiment broadly improves.
Sterling is up a third of a cent at $1.3350.
The dollar is generally weaker, after Federal Reserve chair Jerome Powell signalled he could support another cut to US interest rates soon, as “the downside risks to employment have risen”….
Analysts at Goldman Sachs are expecting Rachel Reeves to announce around £30bn-worth of tax rises and spending cuts in the budget.
In a research note today, they say:
We now expect the government to deliver around £30bn (or 1% of GDP) of fiscal measures in the Budget (vs £20bn before). The adjustment is likely to come on the tax side, including an extension of threshold freezes, new gambling taxes, reduced tax avoidance measures, as well as changes in pensions and property taxation.
We expect these measures to exert an additional demand drag of 0.3% over the coming years and believe the government will avoid raising inflationary taxes.
Regulators: This will cut complexity and boost competitiveness….
The UK regulators insist that their bonus changes won’t encourage reckless behaviour among bankers.
Sam Woods, deputy governor of prudential regulation and CEO of the PRA, said:
“These new rules will cut red tape without encouraging the reckless pay structures that contributed to the 2008 financial crisis. These changes are the latest example of our commitment to boosting UK competitiveness.”
Sarah Pritchard, deputy CEO at the FCA, said:
“Streamlining our remuneration rules by 70% will cut unneeded complexity and make them simpler to follow.
And we’re working faster and smarter to support growth by letting firms apply the changes to this year’s pay cycle.
“The new rules also mean senior managers will continue to follow our high standards and remain on the hook where poor decisions affect consumers and markets”.
As well as speeding up bonus payouts, the UK’s financial regulators are watering down restrictions on how bonuses are deferred, and allowing bankers quicker access to the cash element of their bonuses.
They say their new changes to senior banker pay include:
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Lifting restrictions on the proportion of bonuses that need to be deferred, going further than at consultation. Previously, 60% of the full amount of any bonuses above the £660,000 threshold needed to be deferred. Now only 60% of amounts above that threshold will need to be deferred.
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New rules to give firms more flexibility to allow a greater share of the cash element of bonuses to be received up front. More of the component comprised of shares and other instruments can now be deferred, which helps promote responsible risk-taking. Previously, both the upfront and deferred components of bonuses had to be 50% cash and 50% instruments.
UK bankers to get bonuses faster under new plans
UK bankers will get their hands on their bonuses more quickly, under changes just announced by the Bank of England.
The BoE’s Prudential Regulation Authority, and City watchdog the Financial Conduct Authority have confirmed they will allow more “flexibility around senior banker pay”.
The changes mean that the amount of time that senior bankers must now wait before receiving their full amount of bonus will be cut from eight to four years.
Previously, they had suggested cutting bonus deferrals to five years for senior bankers, and four for less senior staff.
The regulators will also allow part-payment of bonuses for the most senior bankers from year one, rather than year three as it was previously.
The new rules will come into force tomorrow, in time for 2025 pay awards and any other awards made but not yet fully paid.
The PRA and FCA say these changes will create better links between bonus awards and responsible risk-taking, and follow the removal of the banker bonus cap in 2023 (which itself was brought in after the 2008 financial crisis, to deter dangerous risktaking…)
Saxo UK investor strategist Neil Wilson writes…
Rachel Reeves, the Chancellor, is pitching Britain as a paragon of stability and growth at the IMF today. Good luck with that. There is the small matter of one of the most consequential budgets in a generation to get through first. It would be interesting to hear what most business leaders felt about it. Shore Capital pull no punches: The Treasury does “not understand the damage they are causing to this country’s consumer economy.”
Reeves is also reportedly looking again at slashing the allowance for cash ISAs to boost investment in UK equities. It will take a lot more than tweaking around with allowances for retail investors to do this. And I’m not sure about the second order effects – do you move up the risk curve or just plump for less tax efficient cash rates? This has been discussed a lot already but suffice to say a stick is maybe not as good as a carrot.
UK bond yields fall after chancellor’s tax comments
UK government borrowing costs have dropped today, after chancellor Rachel Reeves indicated she could raise taxes in the budget.
The yield, or interest rate, on 10-year UK gilts has dropped by 4 basis points to 4.54%, down from 4.58% last night.
Longer-dated borrowing costs are also lower, with the yield on 30-year gilts dropping by 3 basis points to 5.35%.
Yields, which measure the rate of return on a bond, fall when bond prices rise in the markets.
Bond traders will have noted Reeves’s comments to Sky News that “Of course, we’re looking at tax and spending as well,” when explaining her approach to closing UK’s fiscal black hole in her November budget.
Those comments could reassure the City that the government really is committed to sticking to its fiscal rules, rather than allowing borrowing to rise even higher than planned…
