My day on the City trading floor that convinced me Britain’s in a death spiral and we face a terrible reckoning… without a dramatic change of course: GUY ADAMS
Daily Mail columnist Guy Adams spent a day at the City of London trading floor of IG Group, watching how financial markets reacted to Prime Minister Andy Burnham's first Commons speech, in which he outlined a Left-wing economic vision involving greater state control and protection of public spending. While Burnham's remarks were well received by Labour MPs in Parliament, they triggered immediate unease among traders, with bond yields spiking as the speech was delivered — illustrating a direct clash between the government's spending ambitions and market confidence in the UK's fiscal position.
The piece lays out the scale of Britain's fiscal challenge: the government spends £1,368billion a year but raises only £1,235billion in tax, leaving a £133billion deficit that must be covered by borrowing, on top of national debt exceeding £3trillion. Debt interest payments alone cost £130billion last year, more than double the defence budget. The yield on 30-year gilts rose from 5.7% to 5.94% over the course of the week — the highest level since 1998 — having already climbed from 4.6% when Labour took office in 2024, reflecting investors' growing wariness about the sustainability of UK government borrowing.
- Guy Adams visited IG Group's City trading floor during market volatility
- Burnham's Commons speech coincided with a spike in gilt yields
- 30-year gilt yields hit 5.94%, highest since 1998, amid deficit concerns
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Britain's public finances rely on a huge gap between what the government spends and what it collects in tax, a shortfall covered by borrowing. That borrowing takes the form of government bonds, known as gilts, sold to investors who charge interest, or "yield." When investors grow nervous about a government's ability to manage its debt, they demand higher yields to compensate for the risk, which in turn makes future borrowing more expensive.
Andy Burnham became Prime Minister and used his first Commons speech to set out a Left-wing economic agenda favouring greater state intervention and protecting public spending, a stance that MPs in his own party welcomed. Financial markets, however, respond separately from Parliament, and traders in the City of London watch such speeches closely for signals about future government borrowing and spending plans.
This matters because the UK already carries national debt exceeding £3trillion, with debt interest alone costing tens of billions of pounds a year. Rising bond yields make it more expensive for the government to borrow and service existing debt, creating pressure that can affect everything from public services to the wider economy, which is why the market's reaction to political statements is often watched as closely as the statements themselves.