The jitters-bug

Government debt markets across the world are having a jittery start to 2025, and the UK is one of the most affected economies, with gilt yields volatile amid concerns about stagflation. While these movements pass most people by, they can have a material impact on their living standards. For policy makers, a deteriorating economic outlook may need to be confronted too – either through a changed path for interest rates, or tough choices on tax and spend.

What is driving recent market jitters, and to what extent is Britain an outlier? How might rising yields affect households via rising mortgage costs? How should monetary policy makers respond to the changing economic outlook? Is the government at risk of breaking its fiscal rules? And how should the Chancellor Rachel Reeves respond on 26 March?