Gilt yields fall as interest rate cut expected due to weak economic data

15-year gilt yields chart - Based on figures for July 2025

Annuity Rates UK - July 2025 review

Enhanced annuity rates increased by an average of +0.48% as gilt yields rise 22 basis points to 5.12% by 18 July 2025.

Weak economic data from the UK and US sends 15-year gilt yields lower to 5.01% by the end of the month and investors expect central banks to lower interest rates. In the UK the Bank of England may reduce interest rates by 0.25% at the next meeting on 7 August.

The UK economy has a higher unemployment rate reported in July of 4.7% when 4.6% was forecast, lower than expected retail sales up +0.9% when +1.2% was expected and contracting GDP of -0.1% when the forecast was +0.1%.

In the US non-farm payrolls increased by +73,000 which was far below the forecast of +110,000 and analysts give an 83% chance that the Federal Reserve will cut rates at the next meeting on 17 September.

Find related news here:
Annuity rates reduce by 1pc as investors expect lower interest rates
Annuities fall 0.75pc despite rising gilt yields as investors sell safe havens


Providers of standard annuities reduced rates by an average of -1.01% this month and we would expect rates to fall by -0.39% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers reduced their rates by an average of -0.65% and we would expect rates to fall by -0.75% in the short term if yields do not fall.

Fig 1 below shows the annuity rates changes for the whole market and the proportion that have either increased, decreased or or did not change. It also shows the range of the changes of the annuity rates over the last month:

Annuity Rates Changes Increase No change Decrease   67%   0%   33% Increases of: max 2.3%   Decreases of: max 4.4%

Fig 1: Annuity rate changes for the whole market

Fig 2: Change in standard rates last month compared to gilt yields

Fig 3: Change in enhanced rates last month compared to gilt yields