UK gilt yields have reached their highest level in 27 years, with long-term borrowing costs now above 5.6%.
This reflects persistent inflation, slower than expected interest rate cuts, weaker demand from long-term investors, and concerns about the UK’s fiscal credibility.
Higher borrowing costs mean more public money spent on debt interest and less available for services or investment.
To address this, the government needs to set out a clear and credible medium term fiscal plan, ensure borrowing is focused on growth enhancing investment, and take steps to restore market confidence.
