UK: Commons Speaker Grants UQ On Rising Pressure On Gov't Borrowing Costs

Speaker of the House of Commons Sir Lindsay Hoyle has confirmed that he has granted an urgent question in the Commons today to shadow chancellor Mel Stride, asking Chancellor of the Exchequer Rachel Reeves to deliver a statement on the "growing pressure of borrowing costs on the public finances." Either Reeves or another Treasury minister will be required to answer in person. Urgent questions are from 1030GMT (0530ET, 1130CET). Livestream here. 

• On 8 Jan the Treasury issued a rare statement regarding the spike in UK gov't borrowing costs. A Treasury spox said “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the government will have an iron grip on the public finances.” These are the first public comments from the Treasury on the state of UK finances amid financial market turmoil since the mini-budget crisis of 2022 under then-PM Liz Truss.
• Politically, the situation is much different compared to that of 2022. PM Sir Keir Starmer enjoys the benefit of a huge parliamentary majority and no clear challenger from within his centre-left Labour Party. Political betting markets see either a lengthy Starmer tenure in No.10 (lasting to 2029 or beyond) or his leaving office in 2025 as the most likely scenarios with a 29.9% and 23.3% implied probability respectively according to data from Smarkets. 

Chart 1. Betting Market Implied Probability of Year Starmer Leaves Office, %