UK borrowing costs hit highest since 1998 as 30-year gilt yields top 6%

Britain’s borrowing costs hit a near three-decade high on Thursday, with 30-year gilt yields topping 6 per cent for the first time since early 1998, Reuters reported.

Sterling fell as much as 0.5 per cent to $1.3193, below $1.32 for the first time since late June, and was last down 0.3 per cent at $1.3225. The FTSE 100 dropped as much as 2 per cent before paring losses.

Investors fret about the long-term impact of oil above $100 a barrel from a protracted Middle East war, plus higher borrowing costs and inflation, hitting markets of countries most exposed to imported energy hardest.

Four weeks from the Autumn Budget, the sell-off is a blow for Prime Minister Andy Burnham and Chancellor John Healey. “Prime Minister Andy Burnham and Chancellor John Healey already have enough on their plate without a rapid increase in government borrowing costs since they took office. Gilt yields moving at such a pace presents a major challenge for their spending and borrowing plans,” AJ Bell investment director Russ Mould said.

In his maiden speech as prime minister at Labour’s annual conference this week, Burnham pledged pension changes to fund universal social care, adding to Britain’s strained finances. He also welcomed debate on moving closer to Europe, a possible step towards rejoining the EU. “Any move by the UK to rejoin the EU would likely be seen as a positive by the foreign exchange market,” ING strategist Chris Turner said, ahead of a UK-EU summit due around 20 November.

Sources: Reuters — https://www.reuters.com/world/uk/pound-falls-three-month-lows-investors-fret-over-rates-oil-2026-10-01/; NDTV Profit — https://www.ndtvprofit.com/markets/uk-long-term-borrowing-costs-hit-6-for-first-time-since-1998-uk-bond-yields-12124805; The Hindu BusinessLine — https://www.thehindubusinessline.com/money-and-banking/uk-homeowners-face-mortgage-shock-as-global-bond-sell-off-deepens/article71533915.ece/amp/