Stories

Tue, 05 May 2026

Tue, 05 May 2026 UK long-term borrowing costs reach 28-year high

There have been extra jitters in UK government debt markets ahead of Thursday's local and national elections.

* The yield on 30-year UK government bonds reached its highest level since 1998, at around 5.78%.
* The yield on 10-year UK government bonds also hit an 18-year high, peaking at around 5.1%.
* These increases reflect concerns over global economic uncertainty and rising energy prices due to the Iran war.
* The UK's more inflation-prone economy is seen as a contributing factor to the higher borrowing costs compared to other G7 nations.
* Upcoming elections in the UK have added to market jitters, with analysts expecting Labour to lose council seats and face challenging national elections.
* The government's debt interest costs will increase due to rising yields on government bonds.
* Chancellor Rachel Reeves faces challenges in maintaining her budget rules, which include not borrowing for day-to-day spending and reducing government debt as a share of national income.
* UK government borrowing fell to a three-year low in March but is expected to worsen if inflation rises.