Tue, 02 Sep 2025

Tue, 02 Sep 2025 UK borrowing costs hit 27-year high adding to pressure on Reeves

The interest rate on UK 30-year bonds hits the highest since 1998 as concerns over the economic outlook continue.

* UK government long-term borrowing costs have reached their highest level since 1998, with interest rates on 30-year bonds (gilts) jumping to 5.72%.
* This makes it more expensive for the government to borrow money and adds pressure on Chancellor Rachel Reeves ahead of the Budget.
* The rising interest rates are due to a combination of factors including geopolitical tensions, US President Donald Trump's trade policies, and global economic uncertainty.
* The UK is not alone in seeing borrowing costs rise, with similar trends observed in Germany, France, and the US.
* The government sold a record £14bn worth of 10-year bonds on Tuesday, but investors are increasingly wary of long-term debt due to rising interest rates.
* Chancellor Reeves is expected to increase taxes in the Budget to meet her borrowing and spending rules, with options including freezing income tax thresholds or reforming property taxes.
* The shadow chancellor has accused Reeves of presiding over an "economic disaster" and warned that the economy is now in a precarious position due to anticipated tax rises.
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