World's biggest bank JP Morgan turns bullish on British bonds

Daily Mail​

21-06-2025

The world's biggest bank has turned positive on Britain's creditworthiness as Rachel Reeves lines up more tax rises to balance the Government's books.
In a rare boost for the Chancellor, JP Morgan Asset Management said the cost of servicing UK debt – known as gilts – should fall but only because the Government is 'much more constrained by its own fiscal rules' than other countries.
The US bank, whose £2.7trillion of assets managed are almost as big as the British economy itself, reckons Reeves' rules are 'untouchable' and will limit the amount she can borrow, making gilts more attractive to lenders because fewer of them will need to be sold.
But JP Morgan said the Chancellor will still face 'difficult decisions' filling a hole of up to £15billion in the public finances after she outlined big increases in health and defence expenditure in her recent spending review – despite the economy continuing to flatline.
Reeves has ruled out raising the headline rates of income tax, VAT and employees' National Insurance in her upcoming Autumn Budget, but has left the door open for raiding pension pots and extending a freeze on how much can be earned before taxes are paid.
It comes as growing concerns about the state of the public finances have pushed the cost of government borrowing above levels seen under Liz Truss when investors who lend money to the Government were spooked by the former Prime Minister's package of unfunded tax cuts in the now infamous 'mini-Budget'.
But JP Morgan, run by veteran banker Jamie Dimon, has turned into a buyer of British bonds, in part because Donald Trump's tariffs and tax policies make assets such as the dollar and US debt a less appealing bet.
'The risk/reward trade-off for UK Government debt appears more attractive relative to many of our counterparts around the world,' said the bank's Hugh Gimber.
'Gilts are arguably best positioned, given a relatively weak growth backdrop and a government that is more constrained by its own fiscal rules,' he added.