In a dramatic escalation of the conflict, Ukraine has launched a series of strikes deep inside Russian territory using long-range missiles supplied by the United Kingdom. The attacks, which targeted military installations hundreds of miles beyond the border, represent a significant shift in the balance of power and a direct challenge to Moscow's red lines. Market analysts are now pricing in heightened geopolitical risk, with gilt yields spiking as investors flee to safe havens.
The cost of this escalation will ultimately be borne by Western taxpayers, who must finance an increasingly expensive proxy war. While the strategic benefits for Kiev are clear, the long-term fiscal implications for London are less certain. The Chancellor will need to juggle defence spending against the Treasury's already strained balance sheet.
As the missiles fly, so too does the cost of borrowing.
