22.09.202607:32:49UTC+00UK Gilt Yields Edge Higher on Oil, Wider Deficit

UK 10-year gilt yields inched up to 5.23% on Tuesday, partially reversing an eight-basis-point decline from the previous session, as rising oil prices and fresh public finance figures weighed on markets. Brent crude climbed toward $102 a barrel, poised to break a four-day losing streak amid ongoing uncertainty over oil supplies and possible diplomatic efforts to ease tensions in the Middle East.

On the fiscal front, official data showed the UK budget deficit widened to £18.3 billion in August, overshooting economists’ forecasts of £15.5 billion. The larger-than-expected shortfall was attributed in part to the impact of inflation, which has pushed up government spending on items such as state pensions and social benefits.

Investor focus is increasingly shifting to next month’s Autumn Budget. The government is reportedly weighing revisions to its fiscal rules that would allow borrowing for infrastructure and other capital projects to be excluded from its main borrowing targets—a concept similar to a proposal previously advanced under Keir Starmer’s leadership.