Rathbones Asset Management has reduced its holdings of UK government bonds to avoid a potential selloff if Andy Burnham boosts spending and raises borrowing. The move reflects investor nervousness about a repeat of the market turmoil triggered by former Prime Minister Liz Truss's unfunded tax cuts in 2022.

The asset manager's decision to cut gilt exposure signals growing concern over fiscal policy risks. Burnham, the Mayor of Greater Manchester, has been mentioned as a potential future Chancellor, and his perceived willingness to increase public spending has unsettled bond markets.

Rathbones' defensive positioning underscores the lasting impact of the Truss mini-budget on investor sentiment. The 2022 crisis saw gilt yields surge and the pound plummet, forcing Bank of England intervention. Portfolio managers remain wary of any political signals that could reignite volatility in UK sovereign debt.

The reduction in gilt holdings represents a broader trend of caution among institutional investors. With UK borrowing costs sensitive to fiscal credibility, asset managers are preemptively adjusting duration and credit risk ahead of potential policy shifts.