UK borrowing costs surged to their highest levels since May 1998 yesterday, sending shockwaves through financial markets and intensifying pressure on Chancellor Rachel Reeves. Ministers are struggling to contain growing alarm as the bond market sell-off continued into today's trading session.
The 30-year gilt yield reached 5.72 percent, according to City A.M., marking a dramatic spike that has raised fears about the government's fiscal credibility. The surge represents the most significant borrowing cost increase in nearly three decades, creating an urgent political crisis for the Treasury.
Market turmoil spreads
Sterling experienced its most severe one-day decline since April, when former President Trump announced new tariff policies, City A.M. reports. The currency weakness compounds concerns about investor confidence in UK economic policy and the government's fiscal direction.
Bond traders are pointing to what City A.M. describes as a "chorus" of Westminster voices advocating for higher taxes as a key driver behind the market turbulence. The speculation about tax increases appears to be undermining market sentiment ahead of any official announcements.
Political pressure mounts
The dramatic market moves have put Chancellor Reeves in an increasingly difficult position, with questions mounting about whether the planned Budget can wait until November 26. The government faces growing pressure to provide clarity on its fiscal plans as borrowing costs continue to climb.
Financial analysts warn that higher gilt yields make government borrowing significantly more expensive, potentially constraining the Treasury's ability to fund public spending commitments. The situation echoes previous UK financial crises where market confidence in government debt sustainability came under severe strain.
Sources used: "Daily Mail", "Evening Standard", "City A.M." Note: This article has been edited with the help of Artificial Intelligence.
