UK 10Y Gilt Risk Premium Climbs to 15bp as Starmer Resignation Fuels Policy Uncertainty
Updated
Updated · ING Think · Jun 23
UK 10Y Gilt Risk Premium Climbs to 15bp as Starmer Resignation Fuels Policy Uncertainty
3 articles · Updated · ING Think · Jun 23
Summary
UK 10-year gilt yields are carrying a rising political risk premium, estimated at about 15 basis points, as markets assess uncertainty after Keir Starmer’s resignation and the likely emergence of Andy Burnham.
Burnham has backed fiscal rules, but investors still see room for growth-focused reforms, higher near-term spending and more gilt issuance—factors that could lift both the hawkish inflation narrative and term premium.
ING’s baseline does not see large upside in rates, yet it says political uncertainty alone should keep upward pressure on gilts, with the choice of chancellor also likely to matter for market pricing.
Across Europe, ECB signals have turned more balanced after weak PMI data and easing oil prices below $80 a barrel, though markets still price one more ECB hike by year-end amid lingering geopolitical risks.