UK long-term borrowing costs hit highest level since the 1990s

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The UK’s long-term borrowing costs hit their highest level since the late 1990s on Tuesday as investor worries over the threat of stagflation mount.

The yield on the 30-year gilt touched 5.21 per cent, the highest level this century, ahead of an auction of £2.25bn worth of longer-dated bonds.

The increase pushed the yield past a previous peak touched in October 2023 and also surpassed levels reached during the height of the market fallout from Liz Truss’s ill-fated “mini” Budget in 2022.

Investors’ concerns over the outlook for the UK come amid a global sell-off in government bonds in recent months, driven in part by fears that US president-elect Donald Trump’s tariff plans will be inflationary.

But gilt investors have been particularly worried that a mix of weak growth and persistent price pressures higher will push the UK into a period of stagflation, where the Bank of England is constrained from cutting rates to support the economy.

This is a developing story