UK long-term borrowing costs hit highest level since the 1990s

Unlock Editor’s Digest for free

Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.

UK long-term borrowing costs hit their highest level since the late 1990s on Tuesday as investors worried the threat of stagflation mounts.

The yield on 30-year gilts hit 5.21 per cent, the highest level this century, ahead of an auction of £2.25bn worth of longer-dated bonds.

The increase pushes yields to their previous peak reached in October 2023 and also surpasses levels reached in 2022 at the height of the market collapse from Liz Truss’ ill-fated “mini” budget.

Investor concerns over the UK’s outlook come amid a global sell-off in government bonds in recent months, fueled by fears that US President-elect Donald Trump’s tariff plans will be inflationary.

But gilt investors are particularly concerned that a combination of weak growth and continued price pressures will push the UK into a period of stagnation, with the Bank of England constrained from cutting rates to support the economy.

This is a developing story