Bank of England: Defence spending fears fuelling bond turmoil

Andrew Bailey, Governor of the Bank of England, said uncertainty over how governments will fund larger defence budgets is helping drive turmoil in bond markets. He pointed to an ageing population and slow growth as factors pushing up borrowing costs more broadly.

The remarks land as European governments face pressure to boost military spending without a clear consensus on whether that means higher taxes, more borrowing, or cuts elsewhere. Investors, unsurprisingly, would like an answer before they lend the money.

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