Borrowing costs for the UK Government rose to a two-month high after Andy Burnham’s first comments on the economy since becoming Prime Minister.
Earlier this afternoon, the former Greater Manchester Mayor got the keys to Number 10 Downing Street and signaled what he will prioritise when it comes to the economy.
The yield on 10-year Government bonds, called gilts, moved eight basis points higher to 5.049 per cent at the end of London trading.
Gilt yields have been largely been steady ahead of Mr Burnham becoming Prime Minister but increased after the new Labour leader asserted he would use “any flexibility” within the current fiscal rules to enact his agenda.
Borrowing has been an issue that former Chancellor Rachel Reeves has been forced to contend with in recent years, with the value of gilts decreasing while their yields rise.
Furthermore, the value of the British pound has fallen by 0.28 per cent to £1.341 against the US dollar, despite being in the green throughout most of today.
By the end of trading hours, the Ftse 100 ended up 0.71 per cent lower at 10,524.76 points at the close.
Across the pond, the yield on the US 10-year Treasury widened to 4.59 per cent on Monday from 4.53 per cent on Friday.
Gilt yield on the US 30-year Treasury stretched to 5.11 per cent from 5.06 per cent.
Gold fell slightly to $4,011.08 an ounce on Monday from $4,014.29 at Friday’s close.
Among the biggest risers on the Ftse 100 were Computacenter, up 254.00 per cent at 4,834.00p, Diploma, up 130.00 per cent at 7,370.00p, and Experian, up 43.00 per cent at 2,762.00p.
The announcement of John Healey as Chancellor, replacing Rachel Reeves, came after trading hours with the reaction from markets likely to be evident in the early hours of tomorrow morning.
Nathan Emerson, CEO of Propertymark, said: “Over the coming months, there will be sizeable challenges across the wider economy to overcome.
“Although the year started with quiet confidence in the housing market, there have been sizeable difficulties to contend with in terms of global unease.
“While we have seen inflation progressively start to approach its target and base rates hold steady, there is a much wider picture for John Healey to consider, as he takes on the role of Chancellor of the Exchequer.
“Housing remains fundamental to economic growth, with issues such as Stamp Duty for those buying a property in England or Northern Ireland, as well as taxation frameworks affecting many landlords in the private rented sector, all in need of review and potential restructuring.”
