Gilt yields provide the sketch of a positive narrative for Reeves - but let's see if the falls continue

Good news for Rachel Reeves: the cost of government borrowing has fallen a bit relative to the US and eurozone countries.

- Nils Pratley

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, however. The UK is still paying a painful premium on its borrowing costs, as the chart from 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. The IPPR calculates that, if the premium could be reduced to zero, the Treasury would save up to £7bn each year until 2029-30.

A key point here is that the premium can’t be wholly explained by factors that are widely acknowledged and beyond the government's control. For example: the reduced appetite for gilts among mature UK defined-benefit pension funds and the steady selling by the Bank of England of the gilts it bought in the years after the great financial crisis.