Former PM Truss Warns Rising Bond Stress Could Push UK Toward Spending Cuts

Former U.K. Prime Minister Liz Truss has raised concerns that mounting sovereign debt and currency debasement are behind the recent surge in global bond yields, warning that Britain may be one of the most exposed major economies.

Truss said the increase in borrowing costs reflects the enormous amount of debt accumulated by governments worldwide. She described the U.K. as a particularly severe case and argued that the Bank of England’s money-printing policies have contributed to the depreciation of the currency.

The rise in gilt yields has been pronounced. The 10-year U.K. government bond yield has climbed above 5.2%, while the 30-year yield is nearing 6%. For comparison, the 10-year gilt yielded 5.12% when Truss was prime minister in 2022.

The selling has become a global phenomenon rather than a U.K.-specific event. Yields have risen across the U.S., Japan, France and Germany as investors grapple with elevated public debt, inflation concerns and questions over fiscal sustainability. Higher yields correspond to lower bond prices.

Truss said policymakers should seek to restore economic growth through supply-side reforms while restraining government expenditure. However, she warned that the situation could already have deteriorated beyond the point where conventional measures are enough, potentially leaving governments with no choice but to impose emergency spending cuts.

The U.S. Treasury market has also come under renewed pressure. The 10-year Treasury yield has moved above 4.8%, erasing the decline that followed Treasury Secretary Scott Bessent’s announcement last month of a buyback program focused on longer-maturity government debt. The yield had briefly fallen to 4.62%.

The reversal has coincided with declines in assets associated with the debasement trade. Gold climbed to around $4,700 per ounce before retreating toward $4,300, near its level when the intervention was announced.

Bitcoin has also surrendered part of its recent gains. BTC advanced from roughly $64,000 to around $81,000 before falling back to approximately $76,500. Even after the pullback, the cryptocurrency remains considerably above its pre-announcement price.