By Eniola Amadu
Britain’s long-term borrowing costs have surged to their highest level since 1998, intensifying the pressure on Chancellor Rachel Reeves ahead of her first Budget.
The yield on 30-year government bonds jumped to 5.698% on Tuesday, pushing up the cost of government borrowing and debt servicing.
READ ALSO: UK suspends refugee family reunion applications amid pressure to cut arrivals
The pound also weakened, sliding more than 1% against the US dollar to $1.3379, its lowest level since early August.
The rise reflects wider European trends, with yields on German, French and Dutch bonds reaching their highest since 2011.
Analysts cite global and regional pressures, ranging from geopolitical tensions and US President Donald Trump’s trade stance to political uncertainty in France.
Financial markets appear increasingly anxious about the UK’s public finances. Susannah Streeter, head of money and markets at Hargreaves Lansdown, said investors were sending Reeves a warning: “They are selling off UK government debt, clearly concerned that the government may be losing its grip on the public finances.”
Attention now turns to Reeves’s response in the autumn Budget. Labour has ruled out raising income tax, VAT or national insurance for “working people,” but speculation is mounting over other possible tax measures.
One widely discussed option is extending the freeze on income tax thresholds, currently due to end in 2028.
Dubbed a “stealth tax,” the freeze pulls more people into higher tax bands as wages rise. Reports also suggest property tax reforms could be under consideration, though details remain unclear.
READ ALSO: UK cracks down on overstaying students as Nigerian asylum claims surge
Streeter cautioned that poorly designed tax hikes could risk undermining growth: “With so many options for raising taxes being bandied about during the summer, there appears to be concern that the decisions made might not be sufficiently thought through.
The worry isn’t just that government coffers won’t be replenished, but that they will be filled at the expense of growth, leading to a vicious circle.”
