UK government borrowing costs fluctuated on Wednesday after the Office for Budget Responsibility (OBR) inadvertently published its economic and fiscal forecasts ahead of the official Autumn Budget announcement.
The report, which appeared briefly on the fiscal watchdog’s website, detailed several tax-raising measures expected in the budget. These included freezes on income tax thresholds, new taxes on private pension contributions exceeding £2,000 a year, a mileage-based tax for electric vehicles, and an annual tax on homes valued above £2 million.
The webpage was later taken down. The OBR, which was scheduled to release its forecasts after Chancellor Rachel Reeves delivers the budget statement to Parliament at 12:30 p.m. London time, did not immediately provide a comment.
The premature release triggered volatility in the bond market. Yields on the benchmark 10-year gilt initially fell by as much as four basis points before reversing course, last trading three basis points higher at 4.52%.
The market’s sensitivity comes as investors watch for signs of fiscal discipline, including spending cuts and tax increases, ahead of the budget. The UK currently faces the highest borrowing costs of any G7 nation, with its 30-year gilt yield trading well above the 5% threshold for much of the year.
This heightened scrutiny follows the market turmoil of 2022, when a package of unfunded tax cuts by the government of then-Prime Minister Liz Truss sparked a bond sell-off with long-lasting economic consequences.
Rising government bond yields, which move inversely to prices, not only increase the cost of state debt but can also drive up borrowing costs across the economy, affecting everything from mortgage rates to personal loans.
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