If Rachel Reeves mishandles the Budget, gilt markets will deliver a damning verdict in minutes, triggering a chain reaction of events, warns the CEO of one of the world’s largest independent financial advisory organizations.
The warning from Nigel Green of deVere Group comes after last week’s bonds sell-off proved how quickly confidence evaporates when fiscal intentions look uncertain, with 10-year yields surging in their biggest single-day move since July and forcing investors to reprice UK risk across the board.
UK government bond yields steadied on Monday, however.
The Budget will land in a climate where nerves are already stretched, liquidity is thinner and bond desks are watching every signal from the Treasury with forensic intensity.
Nigel Green, CEO of deVere Group, says: “As we saw last week, gilt markets are paying closer-than-normal attention.
“As such, businesses, households, savers and global investors are facing a moment where the consequences of a misstep could feed through the system fast.
“Gilt yields act as the reference price for almost every major asset and loan class in the country.
“The latest volatility has already tightened corporate credit conditions and pushed mortgage costs upward, illustrating how sensitive the economy is to any hint that the government might struggle to impose discipline.”
Corporate leaders, many already navigating softer demand and higher operating costs, are preparing for the possibility that their refinancing cycle becomes materially more expensive. Investment committees pause when the gilt market sends stress signals. Hiring plans slow as interest bills rise. Supply chain risk increases when credit becomes more costly at the wholesale level.
Households experience the impact even more directly. Mortgage pricing reacts swiftly to gilt moves, particularly for the biggest lenders seeking to protect balance sheets.
Tracker and variable-rate borrowers feel the weight immediately, while fixed-rate households due to refinance face a far steeper path than they did even a few months ago. Public finances come under strain as the cost of servicing government debt rises, leaving less scope to support families if economic conditions soften.
Nigel Green says: “Households cannot absorb endless increases in borrowing costs. When gilt markets force lenders to reprice risk, monthly repayments rise across the country.”
Savers and investors are encountering a more complicated environment too. Higher yields undermine the value of older bonds, which affects pension portfolios, multi-asset funds and wealth-management strategies built around diversification.
Volatility becomes more entrenched when both stocks and bonds weaken at the same time, leaving fewer areas of reliable stability.
The deVere CEO says: “When confidence fades, capital moves globally in search of consistency. Investors want to know the UK is serious about credible fiscal management.”
The broader economy carries the heaviest burden. Momentum slows when rising borrowing costs squeeze business activity, household consumption and government spending simultaneously. Growth prospects weaken, revenue forecasts soften, and fiscal projections become harder to meet.
With the Budget approaching, investors want clarity that the government is prepared to deliver a plan robust enough to reverse last week’s erosion of confidence.
Gilt traders are preparing for a decisive moment. The Chancellor must show she can “anchor expectations without over-promising and without undermining the credibility she needs to stabilise markets,” notes Nigel Green.
The message demanded by global investors is consistent: coherent fiscal rules, discipline in execution and a path that brings debt ratios down over time.
The coming Budget will shape borrowing costs for the government, for companies and for households long after the news cycle moves on. The gilt market has already shown “how sensitive conditions have become.”
A firm, coherent fiscal position could calm yields and re-establish credibility. A weaker approach risks deeper volatility and heavier economic consequences.
Nigel Green concludes: “A mishandling of this high-stake Budget from Reeves would set off gilt markets’ fury and the fallout would then hit businesses, households, savers, investors, and the wider UK economy with almost immediate effect.”
