
Risks to the Financial Sector in 2025
The UK financial system has experienced notable disruptions every 17 years since 1974, including the Secondary Banking Crisis (1974), the collapse of BCCI (1991), and the global financial crisis (2008).

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The UK financial system has experienced notable disruptions every 17 years since 1974, including the Secondary Banking Crisis (1974), the collapse of BCCI (1991), and the global financial crisis (2008).

UK local authorities are reassessing costly and inflexible Public-Private Partnerships (PPPs) to address fiscal pressures, with successful examples like Greater Manchester saving £20 million annually through renegotiation. Careful planning, expert advice, and stakeholder engagement are essential for councils to optimize resources and enhance service delivery.

France faces a period of profound political and economic instability, marked by rapid government turnover, rising bond spreads, and waning investor confidence. While short-term risks remain contained, sustained political fragmentation could undermine fiscal stability and market trust.

UK gilt yields closely track US Treasury yields due to shared monetary policies and global factors, with recent political and economic developments suggesting continued correlation, particularly at longer maturities.

Arlingclose has successfully supported Birmingham City Council in repurchasing £73m of its 9.675% bonds due 2030, replacing them with £88m of new funding from the Public Works Loan Board at an average rate of 4.6%. The refinancing is projected to save £2.8m over five years, significantly reducing interest costs while maintaining a similar repayment profile.

Scottish local authorities' investment balances dropped 20% to £2.4 billion over 12 months to September 2024, outpacing the UK-wide 11% decline, driven by rising expenditure, reserve use, and reduced long-term borrowing. Amid tighter liquidity and 5.5% short-term loan rates, councils face seasonal cash flow pressures but are leveraging higher rates for investment opportunities through proactive financial management.

Look into UK government bonds, or gilts, including their origin, types, and market dynamics, and the inverse relationship between prices and yields. Explore the impact of gilt yields on borrowing costs for UK local authorities and see how economic and political events drive yield volatility, affecting public sector financing.

Discover how the upcoming US election could impact UK borrowing costs.

How capitalising interest costs can lead to significant savings for your authority, and ensure compliance with accounting policies.
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