Bond yields and the Spring Statement
Demystifier
Bond yields: These are basically the return investors get for lending money to a government. When you buy a government bond, you’re essentially giving the government a loan. In exchange, it agrees to pay you interest. The yield is the percentage return you receive on that loan. What makes bond yields slightly confusing is that they move in the opposite direction to bond prices. When investors feel nervous about the economy, they often buy government bonds because they’re seen as relatively safe. In this case prices go up but yields go down. After the US and Israel’s attack on Iran last week there have been many headlines about bond yields because the conflict has pushed up oil prices. This raises inflation fears and reduces the likelihood of interest rate cuts, which drives government borrowing costs higher. It’s important to note that bond yields influence everyday borrowing, from mortgage rates to business loans.
What’s caught our eye
EIB launches new gender action plan
The European Investment Bank (EIB) Group’s plan is for women’s economic empowerment and includes measures to increase access, invest in infrastructure and launch new tools.
PwC report warns on rising female unemployment
Although the article is framed in a way that seems to be blaming women for being unemployed, the report itself highlights an important problem in the UK and one that results in inequality to be embedded in the system early on.
ECB highlights the gender gap in financial literacy
Only 15% of women in Europe have a high level of financial literacy apparently, compared with 27% of men, though we’re not sure how many people will go to the European Central Bank for accessible content.
Your questions answered
What do I need to know about the Spring Statement?
In the UK, chancellor Rachel Reeves delivered her Spring Statement yesterday, but it was more of an economic update than a big policy overhaul. She used the opportunity to mainly highlight the failings of the previous Tory government and praise her own party, noting that inflation is easing and living standards are improving (not sure everyone will agree with that latter point).
She did announce an increase in defence spending but for many the statement was seen as a missed opportunity.
Dr Daniella Jenkins, executive director at the Women’s Budget Group, noted that women’s unpaid labour continues to compensate for the government’s failure to significantly invest in social infrastructure.
“Only today we have seen food inflation increasing again. NHS waiting lists, still at 7.29 million in England, continue to keep people out of work, and our broken social care system strips people of their independence,” she said in a statement. “Recent IPPR research shows a decline in healthy life expectancy. Expensive childcare continues to stretch many families’ budgets too far and pushes women out of the labour market or into debt. With an aging population, the cost of inaction will only grow. The care crisis must be treated with the same urgency as any other economic crisis.”
The chancellor focused on economic forecasts in her speech, which included things like how GDP growth is set to be around 1.1% this year. One very concerning forecast is that a global tax deal done in January for US multinational companies will cost the UK £700m. That’s roughly the cost of training 90,000 nurses, according to TaxWatch’s director Mike Lewis.
Action of the week: The end of the tax year will be coming up soon in the UK, so let us know if you have any questions in the lead up to the 5th of April.