UK government borrowing costs hit 19-year high

Summarised from 2 outlets · Updated 8 Oct, 23:00 · Archive

UK government borrowing costs have reached their highest level in 19 years as investors sell bonds amid inflation fears.

UK government borrowing costs reached a 19-year high on Thursday as investors continued to sell bonds previously considered safe havens, driven by fears of rising inflation. The yield on 10-year government bonds rose to 5.515%, the highest level since July 2007 when the global financial crisis was beginning. Yields on 20- and 30-year government bonds, known as gilts, also rose significantly to their highest levels since 1998.

Bank of England governor Andrew Bailey has warned chancellor John Healey that any budget must be credible and reassure financial markets. Bailey told governments caught in the crosshairs of financial speculators that they needed to avoid market turmoil that raises the interest paid on debt. The recent dramatic moves in government bond markets have been driven by international factors, though analysts said further conflict in the Middle East could push yields up again as concerns increase about inflation becoming embedded in major economies.

Healy's first budget as chancellor is scheduled for 28 October. The pressure on him comes as the benchmark oil price rose by more than 5% to $105.3 a barrel amid escalating tensions in the Middle East and production concerns from a hurricane threat off the US coast.

How it is being reported

• Bank of England chief Andrew Bailey fires off pre-Budget warning to Chancellor over bond markets as UK borrowing costs hit fresh 28-year highThe governor of the Bank of England has fired off a pre-Budget warning that the Chancellor must balance the books or face a renewed bond market storm.This is Money · 8 Oct, 22:48
• Medium-term borrowing costs for UK government hit 19-year highInvestors offload global bonds amid fears of rising inflation, increasing pressure on John Healey ahead of first budget Business live – latest updates Medium-term borrowing costs for the UK government hit a fresh 19-year high on Thursday, as investors continued to offload global bonds amid fears of rising inflation. Recent dramatic moves in government bond markets have been driven by international factors, but will increase the pressure on John Healey ahead of his first budget as chancellor on 28 October. Continue reading...The Guardian · 8 Oct, 13:47

In this story: John Healey · Andrew Bailey · Bank of England · UK · Middle East · US

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