Bond Dealers Forecast Modest Rise in UK Gilt Issuance After Budget, with Long-Dated Supply Set for 35-Year Low
A Reuters poll of British government bond dealers published on 23 October 2026 expects the UK Debt Management Office to raise its 2026/27 issuance target to approximately £249.6 billion, an increase of around £3.4 billion, following Chancellor John Healey's first annual Budget on 28 October. Dealers anticipate higher borrowing further down the track in 2027. The mid-year revision is also likely to shift the composition of supply: long-dated gilt issuance (maturities over 15 years) is expected to fall below 7% of total issuance, the lowest share since 1990. Net issuance of short-dated Treasury bills could roughly double to £10 billion, though their share of total supply, around 3-3.5%, remains well below Germany's approximately 5% and the US's approximately 21%.
Why this matters
The Budget on 28 October is the immediate trigger: dealers are watching whether Healey's spending commitments require materially larger gilt sales than the market has priced. A modest £3.4 billion uplift suggests limited fiscal shock, but the signal that higher borrowing is coming in 2027 means the market is already pricing future supply risk. The structural shift away from long-dated gilts, to their lowest share since 1990, matters for pension funds and insurers that rely on that end of the curve for liability matching. A doubling of Treasury bill issuance changes the short-end dynamics and affects how banks manage liquidity buffers.
On the Ground
Capital markets practices will see demand for advice on gilt documentation, primary dealership agreements, and the regulatory treatment of sovereign debt on bank balance sheets. Debt capital markets associates would be reviewing DMO issuance documentation and monitoring FCA and PRA guidance on liquidity coverage ratios as the bill-to-gilt mix shifts. A trainee would be tracking the DMO's published issuance calendar, updating deal databases, and preparing research notes on how the compositional shift affects client portfolios in insurance and pensions.
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