Overview
- Gilt yields, which jumped Tuesday to about 5.76%–5.80% on 30‑year debt and above 5% on 10‑year notes, reached levels last seen in 1998 and 2008.
- Traders point to the Iran conflict lifting energy and inflation risks and to local‑election uncertainty over Keir Starmer’s leadership that could mean looser fiscal policy.
- The surge lifts the government’s interest bill and tightens Chancellor Rachel Reeves’ room to spend, with the OBR estimating around £111 billion in debt interest last year.
- Market pricing now leans toward possible Bank of England rate increases after last week’s hold, as investors demand more return for holding longer‑dated debt.
- Memories of the 2022 mini‑Budget keep global funds wary of UK politics, and pricier government borrowing is already feeding through to mortgages and business investment.