UK Treasury hopes to kick-start economy with GBP 9bn a year borrowing bonanza, reports The Times

Ministers are drawing up plans to boost economic growth by increasing government borrowing and spending the money on infrastructure, housing and support for business.

Signals of looser UK fiscal policy have historically been a gilt story before anything else, with the transmission running through anticipated supply: heavier issuance tends to bear-steepen the curve as the long end absorbs the additional duration, and the reaction is sharper when the market doubts the growth return on the borrowing. The precedent that matters here is the distinction between borrowing for investment, which has on previous occasions been received more calmly than current-spending stimulus, and unfunded expansion without a credible fiscal anchor, which has at times produced abrupt and disorderly repricing across gilts and sterling together. This is a report of plans rather than a fiscal event, so the pattern in comparable episodes is that the initial move prices the rumour and then waits for the detail: the sizing relative to existing remit, the funding split between conventional gilts and index-linked, and the reaction of the Debt Management Office and the fiscal watchdog. The actors to note are the Treasury's own record of signalling versus delivery, and the Bank of England, whose rate path interacts directly with any loosening in the fiscal stance. The follow-ons are any confirmation or denial, revisions to the issuance remit, and whether the fiscal rules are being redefined to accommodate the borrowing, which is where credibility has historically been won or lost.