Britain is hoovering up the wrong sort of records. In the wake of the Iran war, the economy is staring down the heaviest growth downgrades in the G7, the most stubborn inflation, the greatest exposure to volatile gas prices and some of the thinnest storage capacity in Europe. It is a sobering tally for any prime minister, never mind one whose backbenches are openly muttering about regicide.
Sir Keir Starmer’s insistence on Friday that he will not “walk away” from Downing Street steadied the ship for an afternoon. David Lammy, his deputy, urged colleagues against “changing the pilot during the flight”. Even John McDonnell, never knowingly off-message when there is mischief to be made, could only manage a tart “sometimes you do if you’re in a nosedive” before being reminded that Jeremy Corbyn’s hard-Left prospectus delivered Labour its worst drubbing since 1935.
But beneath the Westminster choreography, something more consequential is unfolding in the gilt market, and it is the small and medium-sized businesses that keep this country running who will feel it first.
Since hostilities flared in the Gulf, UK 10-year gilt yields have climbed by roughly three quarters of a percentage point, briefly nudging above 5 per cent, territory not seriously visited since the 2008 financial crisis. Thirty-year yields have hit their highest level since 1998. The moves have outpaced those in the United States and most of Europe, a worrying decoupling for an economy that has long depended on the goodwill of overseas capital.
This is not a Truss-style detonation. It is something arguably more troubling: a slow, persistent grind higher that is steadily reshaping the cost of borrowing for every business in the land.
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