Government borrowing costs have surged above 6% - their highest level in nearly three decades - in a major blow for Prime Minister Andy Burnham. Long-term gilt yields reached the 6% milestone on Thursday as a global bond sell-off hit debt markets, surpassing levels recorded during Liz Truss's mini-Budget in 2022.
Truss taunts Bank of England Governor
Former Conservative Prime Minister Liz Truss wasted no time in twisting the knife, gloating on social media as borrowing costs under Labour exceeded the peaks of her tumultuous tenure. Sharing a post on X, Ms Truss took a direct swipe at Bank of England Governor Andrew Bailey with an apparent play on words, asking: "Gilt yields hit 6%. Will the Bank of England Bailey the Government out again?"
In an apparent reference to a financial "bailout," her pun targeted Mr Bailey following his decision to launch an emergency bond-buying package to stabilise markets during her own brief premiership in 2022.
Market shock and political backlash
The market shock erupted after data from the London Stock Exchange Group showed Britain's 30-year bond yield hit 6% for the first time in 28 years. Analysts pointed to surging oil prices - with Brent crude trading near $100 (£75.80) a barrel amid Middle East conflicts - which have stoked global inflation fears and driven down bond prices.
Opposition commentators and political rivals immediately pounced on the figures to claim Labour has lost control of the nation's finances. Reacting to The Times report, one widely shared post on X declared: "Labour has crashed the economy. Borrowing costs are way above what they were under Liz Truss and they're getting worse by the hour."
Impact on public finances
Rising gilt yields mean the Government must pay far higher interest to borrow money on international markets. Analysts have warned that this will swallow up billions of pounds in taxpayer cash, squeezing funding for public services and threatening Mr Burnham's key spending pledges.
The surge comes just a day after the Bank of England's Financial Policy Committee warned that the global economic outlook has deteriorated since July. The central bank cautioned that persistently high yields will tighten mortgage and credit conditions for households and businesses, increase market volatility and severely restrict the Treasury's ability to respond to future economic shocks.
