UK government borrowing costs have soared to their highest level since 1998 and the consequences will be swift and sharp.
As the markets send a clear message, the reality is unavoidable: tax rises are not just on the horizon, they’re rapidly becoming inevitable, says global financial advisory giant, deVere Group.
The yield on 30-year gilts has surged to 5.72%, putting unprecedented pressure on the Treasury’s fiscal framework. Chancellor Rachel Reeves faces an increasingly narrow path ahead of the Autumn Budget, with a £41 billion funding shortfall and bond markets demanding reassurance through tighter fiscal discipline.
“Bond markets don’t bluff,” warns Nigel Green, CEO of deVere Group. “They’re demanding credibility. This, we expect, means higher taxes — not because the government wants to raise them, but because it has to in order to stay solvent, fund public services, and stabilise investor confidence.”
The pound has also taken a hit, sliding over 1% against the dollar to its lowest level since early August. While international investors grow nervous, the UK finds itself boxed in: weak growth, limited borrowing capacity, and a long list of promises that require funding.
“Whether you’re in Britain or living overseas with UK-based assets, the direction is painfully clear,” Nigel Green continues.
“Capital is in the crosshairs, and not just for political optics — this is about plugging fiscal holes and placating increasingly jittery markets.”
Amid these tightening financial conditions, shorter-term UK government bonds are still attracting investor appetite. The Debt Management Office just issued a record-breaking £14 billion of 10-year gilts, with bids totalling more than £140 billion — a sign that institutional money is watching every move Reeves makes.
“The smart money is already re-positioning,” says the deVere CEO.
“They see what could be coming down the line, potentially in the form of capital gains tax reform, dividend income changes, frozen inheritance thresholds, and moves on asset structures previously considered safe.”
Despite reassurances from the government that income tax rises for ‘working people’ are off the table, the language has been carefully chosen.
Wealth taxes, property-related reforms, and the closing of so-called “loopholes” are now fair game — politically palatable, technically feasible, and fiscally, many say, necessary.
“This isn’t speculation. It’s the financial reality that we’ve been warning about since the start of the year,” Nigel Green adds.
Indeed, the National Institute of Economic and Social Research has revealed that Reeves’ fiscal headroom is barely £10 billion — a cushion so thin that any unexpected shock could trigger emergency measures.
“With this kind of fragility in the system, governments act quickly. Anyone holding UK property, portfolios, pensions or business interests must be proactive now, not reactive later,” says the chief executive.
He’s calling on UK asset holders to urgently review their financial strategies before the Autumn Budget lands. This means rethinking asset location, rebalancing investment portfolios, exploring cross-border structuring, and revisiting succession plans.
“If your strategy was built for a lower-tax world, you need to evolve. Fast,” Green stresses. “Because what’s unfolding now isn’t likely to be temporary, but structural.”
With both major UK political parties now committed to strict fiscal rules, the era of high public spending funded by cheap debt is over. The new paradigm is one where individuals — particularly those with accumulated capital — are expected to foot more of the bill.
“Waiting for the official announcement is no longer a strategy,” he concludes.
Get real time update about this post category directly on your device, subscribe now.
