Britain’s long-term government borrowing costs have risen to their highest level since 1998, in a potential blow to Prime Minister Rachel Reeves.
The 30-year bond yield soared above 5.24% on Wednesday amid a sell-off in British government bonds. Last year’s 30-year gold yield was 4.38%.
With interest costs expected to rise, pressure will increase on the Treasury’s margin to expand fiscal spending. Treasury yields represent the interest rates a government must pay to investors in public debt and the cost of borrowing by a nation.
Global bond market trends: fear and inflation
The rally came amid investor concerns about a renewed wave of bond selling and the threat of stagflation.
Interest rates have also remained high due to expectations that interest rates in the UK will fall more slowly than previously expected.
There has been a sell-off in government bonds around the world in recent months, fueled by concerns that President Donald Trump could introduce inflationary tariffs into many global economies.
On Tuesday, the UK Debt Management Office sold 30-year bonds for £2.25 billion (yielding 5.19%).
A further 4.25 billion pounds of notes will be sold on Wednesday, while the Bank of England also plans to reduce its balance sheet through the sale of some securities as part of its quantitative tightening process next week.
The DMO said last year that around 296.9 billion pounds of banknotes were expected to be sold in 2024-25.
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