The UK political fragility cost to taxpayers has reached approximately £35bn in additional debt-servicing charges since the end of quantitative easing in 2022, according to new research from Allianz Trade, the global trade credit insurer. The figure reflects a persistent premium investors demand for holding UK government bonds relative to peers, driven by repeated bouts of political instability at Westminster.
Allianz Trade, which reported consolidated turnover of €3.7 billion in 2023 and insures global business transactions representing €1,131 billion in exposure, published the findings as part of a broader study into political fragility across European debt markets.
What the UK Political Fragility Cost Looks Like in Numbers
The insurer’s researchers isolated the additional interest-rate premium the UK pays on government borrowing and attributed it to political uncertainty over tax and spending decisions. Their estimate puts the cumulative UK bill at 41bn euros, or around £35bn, since quantitative easing ended.
Across the eight European countries tracked, political fragility has added between two and five per cent to annual debt-servicing costs. The total cumulative cost for all countries combined stands at 98bn euros, roughly £83.8bn.
The UK accounts for the single largest share of that burden. The government is set to pay its lenders around £110bn in debt interest this year alone, nearly double the defence budget and close to what is spent on education annually.
Ten-year gilt yields fell to around 3.5 per cent in early 2024 but have since climbed to around five per cent. Data from the UK Debt Management Office’s Annual Review 2024-25 shows that 10-year gilt yields rose by 74 basis points over the full 2024-25 financial year, outpacing Germany’s 44 basis point rise, though slightly behind Japan’s 76 basis points. Thirty-year par gilt yields rose by 83 basis points to 5.21 per cent over the same period, with 50-year par yields up 71 basis points to 4.88 per cent.
The Liz Truss mini-budget of late 2022 remains the sharpest single episode. Long-term gilt yields rose by as much as 120 basis points in its wake, prompting investors to attach the label “moron premium” to UK sovereign debt. The episode, which combined unfunded tax cuts with open-ended energy support commitments, became the defining case study cited by the Allianz team.
The UK DMO’s Debt Management Report 2025-26 noted that between April and July 2024 the gilt curve was inverted, with 3-year yields sitting above 10-year yields, before longer maturities began rising faster than shorter ones from July 2024 onwards.
Measuring UK Political Fragility Against European Peers
Allianz has constructed a “political fragility index” measuring how leadership battles, polarisation, and voting patterns affect bond prices. Six years ago the UK ranked among the lowest-fragility countries on the index. As of July 2026, it sits third lowest out of the eight countries tracked, behind the Netherlands, Belgium, and France.
The UK has had five Prime Ministers since the start of 2022: Boris Johnson, Liz Truss, Rishi Sunak, Sir Keir Starmer, and now Andy Burnham. Italy, despite its long reputation for revolving-door leadership, has had just two over the same period in Mario Draghi and Giorgia Meloni.
The report argues that the UK’s Westminster model, which concentrates power and “is decisive but not resolute, so one election can especially rewrite the budget,” sustains a larger gilt premium than countries such as the Netherlands even when raw fragility scores are similar.
Other political events cited by the researchers as market triggers include Rachel Reeves’s decision to loosen fiscal rules and drop planned income tax rises, and Andy Burnham’s public criticism, made while serving as Greater Manchester’s mayor, of the government being “in hock to the bond markets.”
Chief Economist of the Allianz Group Ludovic Subran, alongside investment strategist Patrick Krizan of Allianz SE and research assistant Pierpaolo Fiore, concluded that bond markets had “never been more sensitive” to political changes across Europe.
Jim O’Neill, economist and former Goldman Sachs executive advising Andy Burnham, has said leaders need to stop being “obsessed with the daily signals emanating from social media, opinion polls, and the Westminster bubble.”
The researchers flagged upcoming elections in France, Spain, and Italy as the next pressure points for European sovereign debt markets. On Italy specifically, Allianz said far-right political forces could push the country toward more Eurosceptic positions, raising risk premia and putting pressure on the single currency. With Italian elections on the horizon, the question is whether Rome’s borrowing costs follow the trajectory Westminster set in 2022.
