U.K. yields are at strongly elevated levels, with the 30-year trading in territory not seen since 1998, as markets digest Prime Minister Keir Starmer's shakeup of his economic advisory team. Ritika Gupta joins Squawk Box Europe to discuss.

London

The yield on the UK's 30-year government bond has risen to its highest point since 1998, reflecting market concerns over recent political and economic developments. The appointment of Darren Jones as Chief Secretary to the Prime Minister, a move seen as shifting economic policy influence within the government, has sparked debate about the direction of fiscal policy.

Market observers note that the government's approach to tax and spending, particularly with an upcoming autumn budget and a potential fiscal gap of £20 to £40 billion, is under scrutiny. Discussions around possible wealth and inheritance taxes are ongoing, as the government faces pressure to address both domestic and international economic challenges.

UK 30-year yield climbs to levels not seen since 1998

It certainly looks like she's been sidelined with the bringing of Darren Jones in and creating a new position for him as Chief Secretary to the Prime Minister. He's more of a right-wing member of the Labour Party and he'll be working closely alongside the Prime Minister. It's this idea that they're going to bring work, the Number 10 is going to work more closely with the Treasury after this and it is a powerful role. So yeah, you do get that sense that maybe sidelining Rachel Reeves into some extent because we saw Keir Starmer get a lot of criticism that he was outsourcing a lot of his economic policy to Rachel Reeves and we had a tumultuous autumn budget, there was a lot of backlash from business, we've seen the Labour Party, the polls, they've really tanked in the polls there. And we did see some market reaction to this yesterday but there are, from experts that I'm speaking to, that maybe when we talk about yields and then the 30-year which we're seeing trading at a 27-year high, maybe some of that market reaction was a bit premature because we don't know yet. Darren Jones may be more pro-growth. Outsourcing responsibility for the finances of the country to Number 10, that's kind of how it goes. The most successful Chancellor of the Exchequers in history have had that responsibility outsourced. So what does that say what he thinks about Rachel Reeves? I mean I think about the relationship, whether you like them or not, between Blair and Brown and obviously they had their ups and downs but the fact of the matter is Brown was in charge of economic policy and Blair took over everything else as well. Every single solid economic recovery we've ever had in this country or economic performance has been based on a very strong Chancellor as well, not undermined by his or her Prime Minister. Well they've just had such a series of problems, what we saw with the U-turn when it comes to welfare benefits. So Keir Starmer, he's had a lot of praise when it comes to the international stage but not so much when it comes to domestic policy. So his policy is her policy. Her policy of not increasing taxes on VAT, corporation tax and income tax, that's his policy as well and that's the one that's got them in this pickle in the first place. And you could argue that Darren Jones worked alongside Rachel Reeves in the Treasury so it's still the same thing. But I think the big concern here is the autumn budget coming up because a lot of people are saying this could be a make or break it for the government. Chancellor Rachel Reeves potentially faces a backhaul of 20 to 40 billion pounds and so the big question is how they're going to plug that. A quick line on taxes, Shafiq interested in wealth taxes for instance? Yeah that is one of the areas that she seemed to be keen on, wealth taxes, inheritance taxes. So even though she brings this global expertise, people may think okay maybe actually there will be some fiscal reigning in with her in this position.

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Caracas

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Washington

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Brussels

Middle East Conflict

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Kunar

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Tianjin

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Plovdiv

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Jerusalem

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Kabul

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Sana'a

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Global Tariffs

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Tel Aviv-Yafo

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Chicago

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Hershey

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Barcelona

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Beijing

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Punjab

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Zaporizhzhia

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Minneapolis

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New York

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Breakdown