Stories

Wed, 02 Sep 2026

Wed, 02 Sep 2026 UK long-term borrowing costs highest since 1998 ahead of October Budget

Higher borrowing costs have piled fresh pressure on Andy Burnham ahead of his first Budget.

* UK long-term government borrowing costs have risen to a 28-year high, with the yield on a 30-year gilt reaching 5.89%.
* This is the highest level since 1998 and puts pressure on Prime Minister Andy Burnham ahead of his first Budget next month.
* Borrowing costs in the US, Japan, and Europe have also hit similar highs due to concerns about inflation and state borrowing levels.
* The government's "bedrock" policy will be "fiscal responsibility", but higher borrowing costs will reduce the amount of headroom against self-imposed fiscal rules.
* This means that Chancellor John Healey may have limited room for manoeuvre in terms of spending on consumer-friendly measures to ease the cost of living.
* Conservative leader Kemi Badenoch accused Burnham of "living in the past" and having a "completely wrong" theory of growth.
* The government faces a tough balancing act between taxing and spending, with pressures on defence and the cost of living.
* Market strategists are warning that governments around the world want to increase spending but are turning to borrowing to fund it, pushing up interest rates.