The UK’s long-term borrowing costs climbed to their highest level since 1998 on Tuesday, as a deepening of the Hormuz crisis added to fears the economy faces a prolonged period of higher inflation.
Thirty-year gilt yields rose 0.14 percentage points to 5.78 per cent, to reach their highest level in almost three decades. The yield on the 10-year gilt climbed 0.14 percentage points to 5.1 per cent, close to the 18-year high of 5.12 per cent hit earlier in the Iran war. Yields rise as prices fall.
Gilts have sold off during the conflict as traders bet the Bank of England will be forced to lift borrowing costs to tackle the inflationary fallout from soaring oil prices, in an economic squeeze that is piling pressure on UK Prime Minister Sir Keir Starmer ahead of regional elections this week.