Leading Indicators | Yields ease, focus turns to monetary and fiscal signals

UK 10-year gilt yield falls to lowest level this year

Softer UK inflation earlier this month has reinforced expectations for Bank of England rate cuts in 2025, keeping downward pressure on gilt yields. The 10-year yield has eased to around 4.40%, from its highs earlier in the year, marking the lowest level year-to-date. Speaking this morning ahead of the 26th November Budget, Chancellor Reeves stressed the importance of maintaining fiscal credibility. Longer-dated yields also moved lower in line with the broader rally.

Meanwhile, markets diverge on outlook for global rate cuts

Market expectations for the end of the easing cycle are diverging across major central banks. Terminal rate projections for the Fed and BoE have moved lower, pointing to deeper policy easing in the US (3.05%) and UK (3.33%), while the ECB’s terminal rate has edged higher, suggesting a more cautious easing path in the euro area. Focus now turns to Thursday’s BoE monetary policy meeting for guidance on the policy outlook ahead.

Q4 insights: key concerns for UK businesses

The latest ONS BIC survey found that 72% of UK businesses reported some form of concern in November 2025. Falling demands of good and services were the primary reported business concern at 15.8%, followed by taxation concerns at 14.3%, while property rental costs remained the least reported concern at 1.1%. The findings come ahead of the 26th  November Budget, where business support and the wider tax environment are expected to be in focus.