10 year gilt rates have dropped to a 2025 low this week, in a boost for Chancellor Rachel Reeves.
Safe to say, it’s been a difficult week for Labour. After news that unemployment had jumped to the highest levels since late 2020, it was then reported that Keir Starmer and his allies are fearful of a leadership challenge.
And on Thursday, the Office for National Statistics announced the UK economy had seen slower than expected growth in the third quarter of 2025.
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In the three months to September, the economy grew by 0.1%, including a 0.1% shrink in September. This was partly down to the cyber attack which hit Jaguar Land Rover which drove car production down by more than a quarter.
However, despite all this, there is a glimmer of good news for the Chancellor, as 10 year gilts dropped to their lowest level of 2025.
Gilts are bonds issued by the UK government, and the yield is the interest rate charged on the bond.
On Wednesday evening, BBC economics editor Faisal Islam posted on X that the 10 year gilt had dipped below 4.4% for the first time.
Meanwhile, the two and five year gilts are below the level when Labour came to power, which is filtering through to two-year and five-year fixed mortgage.
Analysing the dip, Islam said the Chancellor will see it as “vindication for tough talk on meeting fiscal rules.”
He wrote on X: “It’s quite something how much the yields have come down in the past month, as they have elsewhere – and makes the choice of timeframe for the OBR quite important…
“The fact that this is starting to filter through to fixed mortgage rates, the Chancellor will see as vindication for tough talk on meeting fiscal rules…
But he added: “The backdrop here is trying to get on the right side of bond markets facing multiple uncertainties including US shutdown, attacks on Fed independence etc… it may be a bouncy ride into the Budget, and the further tricky decisions may materialise in political uncertainty… await the GDP number tomorrow – slowing expected to 0.2.”
You could say Rachel Reeves is the anti-Truss…