Rachel Reeves issued ‘dire’ warning as UK financial system marks ‘staggering’ milestone | UK | News | EUROtoday

An professional has issued a stark warning because the UK financial system has despatched a worrying sign.

Nigel Green, CEO of monetary advisory agency the deVere Group, mentioned that the nation is “staring down the barrel of the stagflation gun”, with stunted development and chronic inflation combining to create “one of the most challenging financial environments in over a decade”.

Mr Green additionally highlighted that, this week, the 30-year gilt yield hit a “staggering” 5.25%. This was its highest level because the 2008 monetary disaster.

A gilt is a Government legal responsibility denominated in sterling that’s issued by HM Treasury and listed on the London Stock Exchange.

The Government ensures to pay the gilt holder a hard and fast money fee coupon each six months till the maturity date, at which level the holder receives the ultimate coupon fee and the return of the principal.

Index-linked gilts are completely different from standard gilts in that the semi-annual coupon funds and the principal compensation are adjusted in step with the UK Retail Prices Index (RPI) with a lag.

Rachel Reeves’ deputy, Darren Jones, has mentioned that the Chancellor won’t break her promise to borrow cash just for funding, and to not pay for day-to-day spending, within the face of excessive gilt ranges.

Rising UK borrowing prices threaten to make it a lot more durable for Ms Reeves to satisfy her fiscal guidelines, The Guardian reviews.

Market turmoil this week despatched UK borrowing prices increased, and the pound decrease. This triggered requires the Chancellor to cancel her journey to China.

Mr Green mentioned: “Stagflation’s grip on the UK has been exacerbated by weak domestic growth, which under normal circumstances would prompt the Bank of England to lower interest rates.

“However, with inflation still uncomfortably high, policymakers find themselves in a precarious position, hesitating to make moves that could further weaken the pound and worsen price pressures.”

He added: “For Chancellor Rachel Reeves, the situation is particularly dire. Her key fiscal rule—eliminating all non-investment borrowing by 2029—now hangs in the balance, as rising interest payments on debt eat into the Treasury’s capacity to act.

“Achieving this goal will demand either politically challenging tax increases or deep public spending cuts. Both measures will hurt economic growth, amplifying the stagflationary spiral.

“The rise in gilt yields signals growing investor caution about the UK’s economic outlook.

“Higher borrowing costs are creating ripple effects across sectors, from property to retail, as businesses and consumers alike face higher for longer interest rates. At the same time, the weakening pound, spurred by fears of stagnation, makes UK assets more attractive to international investors.

“For global investors, the UK’s predicament is not just a warning—it’s a call to action. Stagflation may erode domestic purchasing power, but it also opens the door to undervalued opportunities in key sectors, particularly for those with a long-term strategy.

“Fixed-income securities are more appealing given their higher yields, especially for those seeking safe havens in a turbulent global economy.”