Rachel Reeves’s test from the bond markets starts now

UK gilt yields may have dropped a bit relative to other major countries, but it's not at all clear that the fall with continue

• UK's higher borrowing costs compared with major countries may be coming to an end'

Good news for Rachel Reeves: the cost of government borrowing has fallen a bit relative to the US and eurozone countries. Better news: the chancellor may have something to do with it. Better still: some economists think there's more to come.

Let's not get carried away, though. The UK is still paying a painful premium on its borrowing costs, as the Institute for Public Policy Research thinktank illustrates. Since last year's general election the yield on 10-year government gilts is up almost 70 basis points - or seven-tenths of 1% - compared with US Treasury bonds, and the increase versus the eurozone is almost 25 basis points. The gaps are wider for 30-year bonds and the consequences are real. IPPR calculates that if the premium could be reduced to zero, the Treasury would save as much as 7bn a year until 2029-30.