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Global bond sell-off raises borrowing costs ahead of Healey budget

The sell-off, tied to anxiety over oil prices, sticky inflation, and higher defense spending, has pushed UK government borrowing costs to their highest since the 2008 financial crash.

Reported · Written up by our desk · Europe

With the end of summer recess, the Guardian Economics reports a global bond sell-off has intensified pressure on government funding costs, driven by concern over oil prices, persistent inflation, and mounting pressure to increase defense spending.

The article says those factors have pushed borrowing costs to the highest level since the 2008 financial crash, creating a tougher backdrop for John Healey’s first budget as chancellor.

Economists cited by the outlet estimate that roughly half of the 24 billion pounds in fiscal headroom built by Healey’s predecessor, Rachel Reeves, has been wiped out by higher inflation and interest rates, limiting his room to maneuver.

Healey, returning from the G20 finance ministers meeting in North Carolina, is also weighing factors expected to feed into the Office for Budget Responsibility’s forecasts, including the rising cost of oil after bombing actions referenced in the article.

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