The UK 10-year gilt yield jumped 13 bps to 4.57%, after reports that Chancellor Rachel Reeves is considering dropping plans to raise income tax in the November 26 Budget. The potential U-turn revived concerns about how the government will plug a fiscal gap of up to 35 billion GBP, especially as Labour pledged not to raise basic or higher income tax rates. Reeves had drafted two budget versions, one with major tax hikes and another relying on smaller measures, but political pressure is pushing her toward the latter. She is also reconsidering an exit tax on wealthy leavers and proposals targeting limited liability partnerships. The uncertainty comes amid cabinet divisions and follows recent political turmoil around Prime Minister Keir Starmer. Markets reacted by trimming expectations for Bank of England rate cuts, pricing in a roughly 75% chance of a December move. Rising gilt yields could further complicate Reeves’s fiscal challenge and weigh on UK markets ahead of the budget.