(Bloomberg) -- Chancellor of the Exchequer Rachel Reeves’s deputy said the gilt market is functioning as normal and underlying demand for UK debt is strong, as pressure grows on the British government amid a rise in borrowing costs and wider market selloff.
Most Read from Bloomberg
-
NYC Condo Owners May Bear Costs of Landmark Green Building Law
-
NYC’s Subway Violence Deters Drive to Bring Workers Back to Office
“UK gilt markets continue to function in an orderly way,” Chief Secretary to the Treasury Darren Jones told the House of Commons on Thursday, responding to a so-called urgent question posed by the opposition Conservative Party. “It is normal for the price and yields of gilts to vary when there are wider movements in financial markets.”
Jones was speaking after the pound dropped to its lowest in more than a year, stocks also fell and gilts extended losses for a fourth day on concerns that Keir Starmer’s Labour government will struggle to keep the deficit in check as borrowing costs surge. The minister also said there’s no need for an emergency intervention to shore up the markets.
“It is a long-standing convention that the government does not comment on specific financial market movements,” Jones said. “I will not be breaking that convention today.
Jones also said the UK continues to see strong demand for its debt, referencing yesterday’s over-subscribed auction of new UK 5-year bonds.
Jones was standing in for Reeves, who is scheduled to travel to China for a visit that aims to deepen ties with the world’s second-largest economy. However, Britain’s two biggest opposition parties called on the chancellor to cancel her China trip to address the ongoing market turbulence.
Reeves is “missing in action” and “should now cancel her travel and focus on this country instead,” Tory Shadow Chancellor Mel Stride said in a statement. Liberal Democrat Leader Ed Davey, meanwhile, said Reeves should “urgently” address MPs and cancel an increase to the national insurance payroll tax that she announced at her budget in October.
Asked by journalists whether the Treasury had considered canceling Reeves’ trip to China, the prime minister’s spokesman Dave Pares said no.
The chancellor was visiting to “reset the relationship with China,” Pares said. He added that Reeves would be traveling with Bank of England Governor Andrew Bailey, Financial Conduct Authority Chief Executive Nikhil Rathi, and representatives from major financial services firms in order to “pursue discussion of the UK’s economic interests.”