{"id":412899,"date":"2026-05-05T13:21:10","date_gmt":"2026-05-05T13:21:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/412899\/"},"modified":"2026-05-05T13:21:10","modified_gmt":"2026-05-05T13:21:10","slug":"uks-long-term-borrowing-costs-hit-highest-level-since-1998-economics","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/412899\/","title":{"rendered":"UK\u2019s long-term borrowing costs hit highest level since 1998 | Economics"},"content":{"rendered":"

The UK government\u2019s long-term borrowing costs have hit their highest level since 1998, amid rising fuel prices and concerns about political stability.<\/p>\n

The yield \u2013 effectively the interest rate \u2013 on 30-year UK government bonds (gilts) hit 5.76% at lunchtime on Tuesday, up 0.11 percentage points \u2013 exceeding the 27-year high reached last autumn.<\/p>\n

Yields have been rising across leading economies amid renewed fears over rising inflation, after US efforts to escort ships through the strait of Hormuz prompted Iranian reprisals.<\/p>\n

But the UK has been hit particularly hard by higher borrowing costs since the onset of the conflict \u2013 with some investors blaming uncertainty<\/a> about the outlook for Keir Starmer\u2019s government.<\/p>\n

Higher government borrowing costs will eat away at the headroom the chancellor, Rachel Reeves<\/a>, has built up against her fiscal rules, in the Office for Budget Responsibility\u2019s forecasts for tax and spend.<\/p>\n

City analysts have produced a flurry of research notes in recent days about whether Thursday\u2019s local elections in England and Scottish and Welsh elections could augur the end for Starmer\u2019s leadership \u2013 and what potential successors might mean for tax and spending policy.<\/p>\n

Luke Hickmore, the investment director for bonds at Aberdeen Investments, said markets are \u201cactively pricing\u201d what the outcome of the elections might mean. \u201cPolitics is not background noise. In today\u2019s gilt market, it is a fundamental part of the investment signal,\u201d he said.<\/p>\n

UK bond yields moved more than those of other leading economies on Tuesday, although London markets were closed for a bank holiday on Monday, so had not had time to absorb developments in the Middle East.<\/p>\n

Ten-year UK government bond yields also rose, by 12 basis points or 0.12 of a percentage point, to 5.09% \u2013 the highest level since late March.<\/p>\n

The Bank of England warned of higher than expected inflation last week<\/a>, as it left interest rates on hold at 3.75%, but warned that it might need to take action to bring price rises under control in the coming months.<\/p>\n

Petrol costs have already risen sharply since the start of the war, and higher energy and fertiliser prices are expected to spread to the wider economy in the coming months.<\/p>\n","protected":false},"excerpt":{"rendered":"The UK government\u2019s long-term borrowing costs have hit their highest level since 1998, amid rising fuel prices and…\n","protected":false},"author":2,"featured_media":412900,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-412899","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/412899","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=412899"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/412899\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/412900"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=412899"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=412899"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=412899"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}