Global Market: Britain's bond market poses early fiscal test for Andy Burnham

Britain's bond market is emerging as an early fiscal test for Chancellor Andy Burnham, who has pledged to maintain existing fiscal rules to reassure investors amid concerns over a potential 4.7 billion pound defence funding gap. Benchmark 10-year gilt yields had touched 18-year highs in May on Iran-driven energy inflation, though yields have since eased on falling oil prices and a broader decline in global borrowing costs. Debt interest payments overshot official forecasts by 3.3 billion pounds in May alone, while roughly a quarter of UK government debt remains linked to inflation, keeping bond markets sensitive to energy and price shocks.