Rachel Reeves’s test from the bond markets starts now

UK gilt yields may have dropped a bit relative to other major countries, but it’s not at all clear that the fall with continueUK’s higher borrowing costs compared with major countries ‘may be coming to an end’Good news for Rachel Reeves: the cost of government borrowing has fallen a bit relative to the US and eurozone countries. Better news: the chancellor may have something to do with it. Better still: some economists think there’s more to come.Let’s not get carried away, though. The UK is still paying a painful premium on its borrowing costs, as the Institute for Public Policy Research thinktank illustrates. Since last year’s general election the yield on 10-year government gilts is up almost 70 basis points – or seven-tenths of 1% – compared with US Treasury bonds, and the increase versus the eurozone is almost 25 basis points. The gaps are wider for 30-year bonds and the consequences are real. IPPR calculates that if the premium could be reduced to zero, the Treasury would save as...