Bailey said fiscal policy should be stable and credible ahead of the October 28 Budget.
Why it matters: Higher gilt yields increase the government's refinancing costs and can leave the Chancellor with less room for tax and spending decisions. They can also raise borrowing costs for households and businesses.
- Bailey said fiscal policy must support stability and be viewed by markets as credible.
- The 10-year gilt yield reached about 5.527% on October 8, 2026, its highest level since July 2007.
- Twenty-year and 30-year gilt yields reached about 6.00% and 6.05%, respectively, on October 8, 2026.
- Healey's first Budget is scheduled for October 28, 2026.
Bank of England Governor Andrew Bailey said credible fiscal policy is important for containing market risks ahead of Chancellor John Healey's first Budget.
In a speech delivered on October 8, 2026, Bailey said: "Fiscal policy must likewise be directed towards stability and be seen by markets as credible." He added that clear fiscal frameworks can help contain risk premia during market shocks, and said such commitments are "needed more than ever" when negative shocks occur.
Bailey said recent market moves were abnormal but had not yet become a disorderly stress event marked by illiquidity. He also warned that leveraged positions could amplify moves through forced selling.
The 10-year gilt yield reached about 5.527% on October 8, 2026, its highest level since July 2007. Twenty-year and 30-year yields reached approximately 6.00% and 6.05%, respectively, their highest levels since early 1998, Reuters reported. Yields rise when gilt prices fall.
Reuters linked investor concerns around the sell-off to higher oil prices, uncertainty related to conflict in the Middle East and worries that inflation could persist, alongside broader global bond-market pressure. The available reporting does not establish how much of the rise reflected UK-specific fiscal risk.
Healey has said fiscal discipline is his first priority and that "fiscal credibility is indivisible from growth," according to his September 2026 speech. The Budget is scheduled for October 28, 2026.
By the numbers
- 5.527% - 10-year gilt yield on October 8, 2026, the highest since July 2007
- 6.00% and 6.05% - approximate 20-year and 30-year gilt yields on October 8, 2026
- October 28, 2026 - date scheduled for Healey's first Budget
Yes, but: Bailey's remarks addressed fiscal credibility generally and did not show that he directly appealed to Healey or explicitly linked his comments to the Budget.
What's next: The UK government is scheduled to deliver Healey's first Budget on October 28, 2026.