Why Have UK Borrowing Costs Exceeded Eurozone Peers Since 2022? LDI, Quantitative Tightening, Pension Demand and Fiscal Credibility

Deep End Era. Engineering with Sankalp · Oct 29, 2026 · 1h 13m

Four years after the September 2022 mini-budget and LDI pension crisis, Liz Truss is long gone from Downing Street and fiscal rules are back in place—yet the British government still pays vastly more to borrow for ten or thirty years than Germany, France, or the Eurozone average. Why didn't UK borrowing costs normalize? We dissect the structural transformation of the gilt market from first principles: the LDI leverage spiral, Greenwood-Vayanos preferred-habitat term premia, the Bank of England's active Quantitative Tightening sales, the death of defined-benefit pension demand for long…