A dramatic rise in the yield of German government bonds has caused it to climb above the UK equivalent for the first time in two years.

The yield on UK ten-year gilts is currently 2.16 per cent, while the ten-year German bunds are yielding 2.19 per cent, according to Bloomberg.

The change suggests that investors now see the UK as more of a ‘safe haven’ from the volatility of the global economic crisis than Germany.

The bund yield has leapt in the last 24 hours after a disastrous bond auction yesterday, in which the government only managed to sell €3.644 billion (£3.14 billion) of the €6 billion (£5.16 billion) debt available, a bid-to-cover ratio of 0.61.

The news that Japan had unloaded 1.46 trillion yen (£12.26 billion) of bunds through the first nine months of the year, while simultaneously buying up 1.53 trillion yen (£12.85 billion) of gilts, finally caused the gilt yield to drop below bunds for the first time since 2009.

However, Joshua Raymond, chief market strategist at City Index, claimed investors shouldn’t read too much into yesterday’s bond auction.

He said, ‘Germany remains the supreme economy of the euro zone.’

‘Whilst it is not immune from the crisis, to say that it is making a significant impact on German debt confidence now is rather excessive.’

Raymond also pointed out that the bund yield has dropped from 3.4 per cent in April, which shows that few investors are following Japan’s lead in bailing out of bunds.

He claimed, ‘A sustained break above the 2.2 per cent for German ten-year yields would be significant and this could be a scenario that would indicate falling confidence from investors in Germany.’

Raymond did admit it was a ‘big vote of confidence in the UK economy, despite fears that the UK economy is at risk of seeing at least one quarter of negative growth sooner rather than later, if business conditions deteriorate’.