The UK’s benchmark borrowing costs have risen to the highest level since the financial crisis as investors dumped government debt over inflation fears.
The yield on the UK’s 10-year gilt – a proxy for the government’s debt servicing bill – rose by 0.08 percentage points to 4.76 per cent on Wednesday, the highest level since 2008. The sell-off comes after the yield on 30-year bonds hit a 27-year high this week. Bond yields rise when the price of the asset falls.
The pound also fell by 1 per cent against the dollar to $1.23, underperforming peers, and a worrying sign about how investors see the UK’s fiscal sustainability.
A weakening currency and rising bond yields were last seen in the aftermath of Liz Truss’s mini-budget,