Britain's 30-year gilt yield reached 6% for the first time in 28 years on Thursday, as a worldwide bond sell-off battered debt markets. The surge in long-term borrowing costs adds fresh pressure on Prime Minister Andy Burnham, with levels now exceeding those seen during Liz Truss's mini-Budget in 2022.
The market turmoil followed data from the London Stock Exchange Group revealing the 30-year bond yield struck 6% for the first time in nearly three decades. Climbing oil prices, with Brent crude trading close to $100 (£75.80) per barrel amid Middle East tensions, have fuelled worldwide inflation concerns and pushed bond prices downwards.
Truss mocks Labour over borrowing costs
Former Prime Minister Liz Truss was quick to respond on social media as borrowing costs under Labour overtook the highs recorded during her chaotic 2022 spell in office. Posting on X, Truss delivered a pointed jab at Bank of England Governor Andrew Bailey, questioning: "Gilt yields hit 6%. Will the Bank of England Bailey the Government out again?"
The pun appeared to reference a financial "bailout," targeting Mr Bailey after his choice to unleash an emergency bond-purchasing programme to calm markets during her own short-lived leadership in 2022. Critics are now charging the Governor with applying double standards, alleging he was swift to step in previously while playing down elevated borrowing costs under Labour.
Impact on public finances
Opposition critics and political opponents were quick to seize on the figures to argue that Labour has lost grip of the country's finances. Responding to The Times report, one widely circulated post on X stated: "Labour has crashed the economy. Borrowing costs are way above what they were under Liz Truss and they're getting worse by the hour."
Climbing gilt yields mean the Government must pay considerably higher interest to secure money on international markets. Experts have cautioned that this will consume billions of pounds in taxpayer funds, putting pressure on public service budgets and jeopardising Mr Burnham's major spending commitments.
The spike arrives just one day after the Bank of England's Financial Policy Committee warned that the global economic picture has worsened since July. The central bank stressed that stubbornly elevated yields will tighten mortgage and lending conditions for families and firms, boost market instability and drastically limit the Treasury's capacity to tackle future economic crises.
