Bonds & Rates
Home›Bonds & Rates›Government Bonds›UK 30-year gilt yield hits 1998 high ahead of next mon…
UK 30-year gilt yield hits 1998 high ahead of next month’s Budget
The 30-year gilt yield rose to 5.89%, a move that reduces the government’s fiscal-rule headroom for cost-of-living measures.
UK long-term government borrowing costs have risen to a 28-year high, adding pressure on Prime Minister Andy Burnham ahead of his first Budget next month, according to BBC Business. The yield on the 30-year gilt climbed to 5.89%, the highest level since 1998.
The report ties the move to concerns about inflation linked to the ongoing Iran war, competition from major technology firms for long-term borrowing, and worries about the level of state borrowing. With gilt yields moving inversely to bond prices, higher yields imply lower gilt prices.
Higher borrowing costs also shrink room under the government’s self-imposed fiscal rules, limiting how much Chancellor John Healey can spend on consumer-friendly measures aimed at easing the cost of living. Downing Street said fiscal discipline is the “bedrock” of Britain’s economic stability and national security, while a prime minister spokesperson declined to comment directly on the rise.
BBC Business also notes that the benchmark 10-year gilt yield rose to its highest since June 2008, during the global financial crisis era. It adds that borrowing costs in the US, Japan, and Europe have reached similar multi-decade highs, with market moves linked to expectations that central banks could raise rates.