Burnham to address MPs for first time as PM, as government borrowing costs rise again

Cost of loan to the British government is the highest since 2008published at 12:14 BST

12:14 BST

Faisal Islam
Economics editor

As Andy Burnham prepares to take questions from MPs, borrowing costs for governments across the globe continues to rise, with new multi-decade highs in market interest rates.

The rate for a 10-year loan to the British government – a 10-year gilt – rose to 5.23%, the highest since 2008.

While similar highs have been reached in recent days in the US, Japan and elsewhere in Europe, this will come as little comfort to Burnham.

Global markets reacted in particular after suggestions in the US that its central bank could raise rates. The UK market was closed for the bank holiday yesterday. Japan is also facing pressure to raise rates.

Chancellor John Healey has been in the US attending a meeting of global finance ministers and central bankers. He told the G20 that the UK had the fastest growth in the G7 in 2026 so far, that productivity was improving and that the UK was cutting its borrowing at the fastest rate of the major economies.

The moves in markets, a reflection of concerns about inflation arising from the ongoing Iran war, competition from major tech firms for long-term borrowing, and concerns about state borrowing levels, will make the Budget process yet trickier.

At its last forecast in March the OBR, the official forecaster, assumed the same 10-year borrowing rate would be 4.5%.