UK government borrowing costs remain high as gilt yields approach recent peaks

UK government borrowing costs remain high, with 10-year gilt yields at 4.87% and 30-year gilt yields briefly reaching 5.43%. These levels are just below recent peaks, indicating increased costs for government borrowing. The rise in yields is linked to a global sell-off in government bonds, driven by concerns over inflation and rising borrowing. Analysts note that the UK’s yield increase is larger compared to other countries, reflecting low investor confidence in fiscal management. The Bank of England is expected to cut rates by 0.5 percentage points this year, maintaining a base rate of 4.25%. Concerns about stagflation and fiscal sustainability are growing among investors, impacting market sentiment.