Prime Minister Burnham said he will seek to use "any flexibility" in government
fiscal rules, prompting investor concern the government may further increase the
UK’s heavy debt burden and driving gilts lower. The 10-year gilt yield rose
intraday as much as 7 bps to 5.02%; the 30-year yield gained 8 bps to 5.73%. The
move sensitivity reflects any sign the new government might loosen budget
discipline; UK borrowing costs are among the highest in developed markets and
public debt is close to 100% of GDP. Markets had been buoyed ahead of Burnham
taking office on Monday by expectations Home Secretary Shabana Mahmood would
become chancellor, as she was viewed as a more fiscally conservative option.
