{"id":758876,"date":"2026-09-03T19:12:15","date_gmt":"2026-09-03T19:12:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/758876\/"},"modified":"2026-09-03T19:12:15","modified_gmt":"2026-09-03T19:12:15","slug":"uk-borrowing-costs-surge-as-oil-shock-rattles-global-markets","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/758876\/","title":{"rendered":"UK Borrowing Costs Surge as Oil Shock Rattles Global Markets"},"content":{"rendered":"

The global rise in borrowing costs is a \u201cparticular concern,\u201d the International Monetary Fund has said, as UK bond yields<\/a> reach a level last seen in the financial crisis.<\/p>\n

The yield on the 10-year UK gilt climbed four basis points on Wednesday morning to near 5.27 per cent, which followed the previous day\u2019s rally that saw yields spike as much as 15 basis points. Longer-term gilt yields were up five basis points to almost 5.89 per cent, nearing highs reached on Tuesday.<\/p>\n

Similar moves are taking place across the globe, with India\u2019s 10-year bond yield topping seven per cent and Australia\u2019s equivalent surging to a 15-year high at over 5.2 per cent.<\/p>\n

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), sounded the alarm on the recent developments at the G20 meeting with top finance ministers and central bank governors in the US.<\/p>\n

\u201cThe sovereign debt landscape for emerging and low-income countries has gradually improved in recent years, thanks to domestic policy efforts and international cooperation,\u201d she said.<\/p>\n

\u201cBut progress has been uneven, and persistent risks and uncertainty in the global economy, including spillovers from the significant increase in yields in advanced economies, call for policy discipline and underscore the importance of building buffers.\u201d<\/p>\n

Georgieva added: \u201cThe increase in global interest rates is of particular concern.\u201d<\/p>\n

UK in \u2018acute\u2019 position position as borrowing costs spike<\/p>\n

The sell-off has stemmed from soaring energy prices after oil and gas supply was disrupted following the Iran war. Brent crude \u2013 the international benchmark for oil prices \u2013 climbed above $95 per barrel on Wednesday to its highest level in nearly six weeks.<\/p>\n

In the UK, the bond sell-off has turned pressure on Chancellor John Healey<\/a>, who is set to deliver his first Budget at the end of October.<\/p>\n

Economists at Bloomberg have forecast Healey will see \u00a312bn knocked off<\/a> the \u00a323.6bn in headroom left by former Chancellor Rachel Reeves in the 2025 Budget.<\/p>\n

\u201cGovernments around the world are feeling the pressure from bond markets, but the situation is particularly acute for the UK, where Andy Burnham\u2019s grand promises about reforming the economy are about to meet the cold reality of high debt levels and rocketing borrowing costs,\u201d Chris Beauchamp, chief market analyst at IG, said.<\/p>\n

\u201cUK taxpayers face the likelihood of paying more for his grand ambitions, while also having to worry about a Bank of England rate hike that becomes more likely with each $1 on the price of oil.\u201d<\/p>\n

By CityAM<\/a><\/p>\n

More Top Reads From Oilprice.com<\/p>\n

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