The cost of borrowing for the UK government has surged to its highest level in over two decades, fueled by worries about the Bank of England's ability to lower interest rates and the looming threat of stagflation.
UK long-term borrowing costs have hit their highest level since 1998.The unwanted milestone for the Treasury's coffers was reached ahead of an auction of 30-year bonds, known as gilts, this morning.The yield - the effective interest rate demanded by investors to hold UK public debt - peaked at 5.21%.At that level, it is even above the yield in the wake of the mini-budget backlash of 2022.
The premium is up, market analysts say, because of growing concerns the Bank of England will struggle to cut interest rates.Just two cuts are currently priced in for 2025 as investors fear its hands could be tied by a growing threat of stagflation.What's this jargon?It essentially covers a scenario when an economy is flatlining at a time of rising unemployment and inflation.Growth has ground to a halt since the second half of last year.Labour accused the Tory government of crashing the economy following the market meltdown of 2022.It is fair to expect the opposition to now claim that Labour has taken just six months to do the same
UK Borrowing Interest Rates Stagflation Bank Of England Economy
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