Prolonged market instability in the United Kingdom would force the government to implement more tax hikes or spending cuts that could derail key growth initiatives and heighten political pressures on the government. The U.K. government's borrowing costs have risen sharply over the past two weeks, with the yield on 10-year and 30-year government bonds climbing to 4.87% and 5.43% as of early trading on Jan. 14, respectively, each to their highest since 2008 and 1998. Meanwhile, the British pound dropped nearly 0.5% to $1.22 against the U.S. dollar on Jan. 14 (and nearly 2.5% since the start of 2025), its lowest level since November 2023. Speaking to Parliament on Jan. 9, Treasury Minister Darren Jones sought to reassure markets, asserting that U.K. bond markets ''continue to function in an orderly way'' despite recent pressures, and that ''underlying demand for the United Kingdom's debt remains strong.'' However, mounting criticism from British...
