4 godzin temu
UK borrowing costs have surged to their highest levels since May 1998, 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, with fears mounting that the government's fiscal credibility is under severe strain.
The 30-year gilt yield reached levels not seen in 27 years, with different reports showing the rapid deterioration. GB News reported yields at 5.27 percent, while City A.M. recorded them hitting 5.72 percent, illustrating how quickly borrowing costs have escalated and creating an urgent political crisis for the Treasury.
Global market pressure builds
The UK crisis is unfolding against a backdrop of rising global borrowing costs, with US Treasury yields also approaching five percent for the first time since July. This global context compounds the pressure on British assets and raises questions about whether the UK's fiscal challenges are part of a broader international trend or reflect specific concerns about government policy.
Sterling experienced its most severe one-day decline since April, when former President Trump announced new tariff policies. The currency weakness compounds concerns about investor confidence in UK economic policy and the government's fiscal direction, with traders pointing to speculation about higher taxes as a key driver behind the market turbulence.
Expert warnings intensify
Financial analysts are expressing growing alarm about the government's fiscal position, with experts warning that higher gilt yields make government borrowing significantly more expensive. Bond traders have criticised what they describe as a "chorus" of Westminster voices advocating for higher taxes, arguing this speculation is undermining market sentiment and raising fears about the impact on economic growth.
The government had to pay a premium when auctioning long-term bonds yesterday, highlighting how investors are demanding higher returns to hold UK debt. This development echoes previous UK financial crises where market confidence in government debt sustainability came under severe strain.
Political crisis deepens
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 situation has created what analysts describe as an acute financial crisis, potentially constraining the Treasury's ability to fund public spending commitments.
The escalating borrowing costs represent the most significant test of the government's economic credibility in nearly three decades. Financial markets appear to be sending a clear signal that current fiscal policy expectations are unsustainable, forcing ministers to confront the possibility of earlier intervention.
Sources used: "Daily Mail", "Evening Standard", "City A.M.", "GB News" Note: This article has been edited with the help of Artificial Intelligence.
