Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Trump’s tariffs send UK borrowing costs soaring, forcing Reeves to rethink economic roadmap

by July 8, 2025
July 8, 2025
Trump’s tariffs send UK borrowing costs soaring, forcing Reeves to rethink economic roadmap

Chancellor Rachel Reeves has been warned that her economic roadmap may need to be “ripped up” as a global market shock triggered by Donald Trump’s new wave of tariff threats drives up UK government borrowing costs and rattles investor confidence.

The yield on 10-year UK gilts surged to over 4.63%, as global markets reacted to the US President’s aggressive protectionist rhetoric. The tariffs, aimed at reshaping global trade relationships, have fuelled a flight to the US dollar and driven up borrowing costs across Western economies — including Britain.

Trump’s move comes just as Reeves had begun implementing Labour’s fiscal agenda, which includes a commitment to ramp up public investment. But the sudden tightening of fiscal conditions could derail those ambitions.

“Trump rants and the world pays,” said Ken James, Director at Contractor Mortgage Services. “We’ve seen gilt yields jumping and borrowing costs are up — will mortgage rates be next? Reeves’ roadmap may have to be ripped up.”

The impact of Trump’s tariffs is colliding with domestic fiscal vulnerabilities. A new report from the Office for Budget Responsibility (OBR) warned that Reeves’ recent U-turns on spending restraint had left the UK more exposed to future economic shocks, with Britain’s debt-to-GDP ratio projected to skyrocket to 270% by the early 2070s.

The OBR’s alarm bells come amid broader market anxiety. Investors are demanding higher returns to lend to the UK, reflecting both Trump-driven uncertainty and scepticism over the country’s ability to balance spending and debt.

“The pound is down against all major currencies,” said Tony Redondo, founder of Cosmos Currency Exchange. “Gilt yields are now spiking above Liz Truss levels — this is serious. The Chancellor’s fiscal headroom is shrinking by the hour.”

The repercussions are already being felt closer to home. With gilt yields rising, banks face higher wholesale borrowing costs — which could soon be passed on to consumers in the form of rising mortgage and loan rates.

“Higher gilt yields push up the cost of borrowing for lenders, which ultimately affects consumers,” said John Woolfitt, Director at Atlantic Capital Markets. “If inflation expectations rise due to global supply shocks, the Bank of England could even delay rate cuts.”

That leaves the Bank of England in a dilemma: support growth or tame inflation. Neither option is pain-free, particularly if trade disruption drags down GDP while pushing prices up.

Reeves’ immediate challenge is now fiscal: the higher cost of borrowing could add billions to the UK’s annual debt servicing bill. Each additional basis point on gilts translates to roughly £5 billion in extra annual costs.

“Just as Labour needs every penny for its promised reforms, each Trump-induced tweet is adding billions to Reeves’ tab,” said Kundan Bhaduri, entrepreneur at The Kushman Group. “It’s like watching your mortgage rate climb while someone else holds the ladder.”

Others warned of broader implications. David Stirling, Director at Mint Mortgages & Protection, said the rise in gilt yields could further weaken the housing market.

“Trump tweets, gilts jump, and Rachel Reeves winces. Mortgage rates could follow suit — bad news for anyone trying to get on the ladder before it’s pulled up.”

While some, like Samuel Mather-Holgate of Mather and Murray Financial, believe Trump may not follow through on his full list of tariff threats, the current volatility is already reshaping market expectations.

“Trump thrives on chaos, but his policies often fizzle. Still, this spike might be temporary — lenders may wait it out,” Mather-Holgate said. “But holidaymakers beware: the pound is falling fast against the euro.”

Meanwhile, Reeves must weigh the costs of sticking to her economic plans against the realities of market turbulence.

“Trump has created another fly in Labour’s inkwell,” said Ken James. “Her plans may now be unaffordable in the short term.”

As Trump’s tariff sabre-rattling ripples across global markets, the UK finds itself exposed. The combined pressures of higher borrowing costs, shrinking fiscal space, and a jittery bond market have delivered a clear warning to the Chancellor: this is not the environment she planned for.

With Labour only just in office and a fragile economy underfoot, the weeks ahead may force a fundamental rethink of Reeves’ economic ambitions — whether she likes it or not.

Read more:
Trump’s tariffs send UK borrowing costs soaring, forcing Reeves to rethink economic roadmap

0
FacebookTwitterGoogle +Pinterest
previous post
Government bans NDAs that silence harassment and discrimination victims
next post
Tariff Shock Spurs “Buy-the-Dip” Setups in Tesla and ON Semiconductor

You may also like

House price falls expected into new year, Halifax...

October 9, 2023

160,000 Rental Properties Lost as Landlords Exit Market...

May 27, 2024

UK firms asked to disclose China investments as...

August 22, 2023

How Faris Abusharif Is Helping to Evolve the...

November 30, 2022

BP boss Bernard Looney resigns after failing to...

September 13, 2023

Copper Mountain Technologies Focuses on Enabling Engineers in...

February 12, 2025

The Great Friendship Project Unveils New Website with...

April 2, 2025

Aston Martin shares slump after profit warning amid...

September 30, 2024

UK unemployment rises as wage growth slows, affecting...

November 12, 2024

Grimsby-based myenergi set to become UK’s largest home...

April 6, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • ‘Bait and switch’: Schumer warns of bitter funding fight over GOP cuts plan

      July 8, 2025
    • UK Government unveils £92bn transport overhaul to drive growth and connect communities

      July 8, 2025
    • New book exposes Jill Biden’s power grab amid husband’s political demise

      July 8, 2025
    • Tariff Shock Spurs “Buy-the-Dip” Setups in Tesla and ON Semiconductor

      July 8, 2025
    • Trump’s tariffs send UK borrowing costs soaring, forcing Reeves to rethink economic roadmap

      July 8, 2025
    • Government bans NDAs that silence harassment and discrimination victims

      July 8, 2025

    Categories

    • Business (8,421)
    • Investing (2,105)
    • Politics (15,967)
    • Stocks (3,193)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved