In September 2022 the British press settled on a phrase: the moron premium. One chancellor, one mini-budget, one spike in gilt yields. It was a tidy story. It was also wrong. The UK has been paying a premium over the G7 to borrow for the entire period since 1997. In 2025, under a different government, that premium is higher than it was in the year of the mini-budget — and the headline writers have gone quiet.
May 2026 · Bank of England · OECD · FRED St. Louis Fed
On 23 September 2022, Kwasi Kwarteng announced £45 billion of unfunded tax cuts in twenty-three minutes. Gilt yields jumped. Sterling dropped. The press, with remarkable speed, agreed on a phrase: the moron premium. The chancellor was the moron. The premium was his fault.
The story suited everyone. It suited the opposition, who could point to one budget. It suited the markets desk, who could turn a complicated repricing of UK sovereign risk into a personality piece. It suited the Conservative establishment, who needed Truss and Kwarteng to be the problem so the rest of the party could carry on.
It is now nearly four years later. Liz Truss has been gone for almost the entire period. Kwasi Kwarteng has not been in front-line politics since October 2022. And the premium the UK pays to borrow is higher today than it was at the peak of the mini-budget panic. Nobody is calling that anything.
The UK has paid an interest-rate premium over the rest of the G7 for almost every year since 1997. Across 28 years of data, the average premium has been roughly +80 basis points on the 5-year gilt, +62 on the 10-year, and +38 on the 30-year. There have been brief discounts — pension-driven demand for long debt in 2000–02, safe-haven flows during the eurozone crisis in 2011–13 — but the long-run state of the UK gilt market is a premium.
The chart below plots the UK's annual yield premium over an unweighted G7 ex-UK average for each maturity. The horizontal black line is parity. Anything above it is the UK paying more to borrow than its peers. Anything below is the UK paying less.
UK gilt premium over G7 ex-UK average · annual averages · basis points
5-year
10-year
30-year
Source: Bank of England (IUAAMNPY and DMO benchmark gilt series), OECD Main Economic Indicators, FRED St. Louis Fed. G7 ex-UK = unweighted simple average of US Treasuries, German Bunds, French OATs, Italian BTPs, Canadian and Japanese government bonds at equivalent maturities. Annual averages. 2025 figures estimated from year-to-date data. 100 bps = 1 percentage point of yield.
The years that look most like 2022 are not the ones the press treats as warnings. They are 1997, 2004, 2007 and 2008 — all of them years where the UK paid 140 to 165 basis points more than the G7 average on its 5-year gilt. None of those years were called anything. They were the normal cost of borrowing as a sovereign with a structural deficit, sticky inflation and a service-led economy. The mini-budget was not a moment of unprecedented punishment by the market. It was a moment when the long-run premium became briefly visible.
Compare 2022 — the year of the mini-budget, on an annual-average basis — to 2025 under Rachel Reeves. Side by side, the same chart with two columns.
UK premium over G7 average · annual average · 2022 vs 2025 · basis points
5-year gilt
2022
+95 bps
2025
+157 bps
10-year gilt
2022
+82 bps
2025
+160 bps
30-year gilt
2022
+53 bps
2025
+160 bps
Source: Bank of England and OECD MEI as above. 2022 figures are annual averages and therefore smooth over the late-September spike, which was sharper at the long end of the curve. 2025 figures estimated from year-to-date data. The whole curve has converged: investors are no longer differentiating UK risk by maturity.
The premium has gone up, not down. On every measured tenor, the UK is paying a wider spread over the G7 in 2025 than in 2022. The 30-year premium has tripled. The curve has flattened — investors price the same fiscal risk across 5, 10 and 30 years simultaneously, a structural change visible in the data since 2023.
If the 2022 premium was the price of a moron, the 2025 premium is the price of what?
Calling 2022 a moron premium located the problem in two individuals. The data describes something different: a policy regime, sustained across every government since 1997, that lenders have been pricing for the entire period.
The policy regime that built the premium, 1997 to present
1997
New Labour, structural expansion of the stateLab
Government spending grew from 36.3% of GDP in 1997 to 41.1% by 2007 — financed by a credit cycle, not productive growth. The 5-year gilt premium averaged +130 bps over the period. Lenders were already pricing what the politics did not acknowledge.
2008–10
Bank bailouts, never unwoundLab
Roughly £137bn in direct rescues plus the recession's deficit explosion. Debt-to-GDP doubled. Cross-party in substance. The premium narrowed only briefly during the eurozone crisis when the UK was the least bad option in Europe.
2010–16
Austerity rhetoric, debt kept growingCon
Annual deficits fell. The stock of debt did not. Headline targets were missed; the architecture was preserved. By 2014 the 5-year premium was back to +55 bps and rising — the brief eurozone-era discount had ended.
2020–21
COVID emergency, locked in at the bottomCon
Roughly £400bn added to the national debt in two years, much of it at coupons of 0.125% to 1%. The bonds are now refinancing at 4 to 5%. The maturity wall is the bill.
2022
Mini-budget — a sequencing failure, not a regime changeCon
£45bn of unfunded tax cuts announced without an OBR forecast. The package was withdrawn but the spread over Germany widened permanently. The lesson lenders took was about predictability, not ideology.
2022–24
Sunak and Hunt: stability, same premiumCon
Headline calm restored. The 5-year premium in 2024 was +125 bps — broadly the same as the worst of the mini-budget annual average. The architecture had not been reformed; the volatility had been muted.
2024–26
Reeves: the highest premium of the entire post-1997 periodLab
Eight governments. Five prime ministers in five years. One direction of travel. The premium the UK pays to borrow has not been a function of competence in any one chancellor. It has been a function of a policy regime — sustained across both major parties — that lenders have priced consistently for nearly three decades.
The lenders charging the premium are not making a moral judgement. They are pricing the probability that the UK services its debt without inflating it away. That probability has been deteriorating across multiple administrations.
+80 bps
UK 5-year premium 28-year average
+157 bps
UK 5-year premium 2025 — higher than 2022
0
Front pages calling the current premium anything
The moron premium is real. It just isn't who the press said it was.
Social cards
One number per card. Copy-paste ready.
GBTT
+157 bps
UK 5-year gilt premium over the G7 average in 2025. The annual average in 2022 — the year of the mini-budget that was branded a "moron premium" — was +95 bps. Today's number is higher. Nobody has named it.
Bank of England · OECD · FRED
The "moron premium" in 2022 was +95 bps annual average on the 5-year gilt. In 2025, under a different government, it's +157 bps. Higher than the chancellor everyone blamed. The headline writers have gone quiet.
GBTT
28 yrs
The UK has paid an interest-rate premium over the G7 average for almost every year since 1997. Average premium across the period: roughly +80 bps on the 5-year. The 2022 panic was not unusual. It was the long-run state of UK borrowing becoming briefly visible.
Bank of England · OECD MEI
The UK has paid a premium over the G7 to borrow for 28 years. The 5-year average is +80 bps. 2022 wasn't a moment of unprecedented market punishment. It was the long-run cost of being Britain becoming briefly visible.
GBTT
7 PMs 1 premium
From Blair to Starmer, every Labour and Conservative government has paid the same UK-specific premium over the G7. The premium fell briefly during the eurozone crisis and barely at all otherwise. The regime is the constant. The chancellors are not.
28-year gilt spread data
Blair, Brown, Cameron, May, Johnson, Truss, Sunak, Starmer. Seven prime ministers. One unbroken premium. The chancellor changes. The regime that lenders are pricing does not.
GBTT
+160 +160 +160
The UK premium over the G7 on the 5, 10 and 30-year gilt in 2025 — all three nearly identical. The curve has flattened. Investors are no longer differentiating UK risk by maturity. They are pricing the same fiscal risk across every horizon.
2025 estimate · BoE / OECD
In 2025 the UK 5-year, 10-year and 30-year gilts all carry roughly the same +160 bps premium over the G7 average. Investors aren't differentiating UK risk by maturity anymore. They've priced the regime as a single fact.
HM Treasury Budget documents 1997–2025: fiscal rule changes, deficit forecasts, and debt projections by administration.
A note on methodology. The G7 ex-UK average is an unweighted simple average of the equivalent-tenor benchmark yield in each of the United States, Germany, France, Italy, Canada and Japan. A GDP- or debt-weighted average would change the level but not the direction of the result. The 2025 figures are year-to-date annual estimates and will be revised. The 2022 figures are annual averages and therefore smooth over the late-September intraday spike, which was sharper than the annual figure suggests, particularly at the long end of the curve. The point of the article is not to defend the mini-budget — its sequencing was a mistake by any reasonable standard — but to put the premium it produced in its proper 28-year context.