Morgan Stanley strategists argue the United Kingdom should double its issuance of short‑term government bills to relieve pressure on the gilt market and curb rising borrowing costs. By expanding the supply of liquid debt, they expect investors to shift from higher‑yielding longer bonds, stabilising yields in the near term.

Recent Treasury financing has leaned heavily on long‑dated gilts as short‑term funding dried up after the Bank of England’s rate hikes tightened liquidity. Investors have demanded higher premiums, pushing gilt yields above 4%, which in turn raises the cost of servicing the UK’s £2 trillion debt stock and eroding confidence among pension funds.

Policy makers will need to weigh the Treasury’s capacity to issue more bills against fiscal constraints and market appetite. If the government follows Morgan Stanley’s advice, bond traders will monitor auction volumes and bid‑to‑cover ratios for signs of renewed demand. A smooth rollout could temper yield volatility ahead of the next budget and could influence the upcoming fiscal plan.