Key facts
- The FTSE 100 is expected to open lower.
- Borrowing costs have risen due to Prime Minister Andy Burnham's 'fiscal flexibility' remarks.
- John Healey has been appointed as Chancellor.
- Ten-year gilt yields increased by eight basis points to 5.049% on Monday.
- The pound weakened by 0.29% against the US dollar on Monday evening.
The FTSE 100 is bracing for a lower opening as borrowing costs increase following comments from Prime Minister Andy Burnham regarding 'fiscal flexibility'. Burnham's appointment of John Healey as Chancellor, a move that initially saw a marginal rise in sterling and positive analyst reactions, comes after earlier remarks that spooked bond markets. Healey's experience in the Treasury is seen by some as a sign that Burnham will respect market checks on his policies. However, Burnham's pledges of a 'new economic model' and 'fiscal flexibility' have raised concerns. On Monday, the yield on ten-year gilts climbed eight basis points to 5.049%, and the pound weakened by 0.29% to 1.341 against the US dollar. Burnham's first speech as Prime Minister promised 'breathing space' for households, a sentiment echoed by the British Chambers of Commerce, which urged similar relief for businesses facing cost pressures.