The yield on 30-year UK government bonds rose to 5.89% on Tuesday morning, its highest level since 1998, as gilts led a sell-off in international government debt markets. The Press Association reported the 30-year yield up 10 basis points on the session; Bloomberg carried the same 5.89% level.
The benchmark 10-year gilt yield also climbed, reaching as much as 5.223% according to PA — the highest since June 2008, at the height of the financial crisis. Reuters put the 10-year at around 5.23%, up seven basis points, while Bloomberg reported a rise of as much as 11 basis points to 5.25%, differences consistent with snapshots taken at different points in the morning from different pricing sources.
The move comes eight weeks before the Budget, which the government has confirmed will be delivered on Wednesday 28 October. It will be the first Budget of Andy Burnham's premiership and the first for John Healey as Chancellor, who set the date on 31 July and commissioned an Office for Budget Responsibility forecast to be published alongside it.
Gilt yields are the interest rate the market demands to lend to the government, and they set the cost of new borrowing. On the day's numbers, the 2008 comparison applies to 10-year borrowing; at the long end of the curve, the reference point is 1998, a 28-year high. PA dated that earlier peak to March 1998, Bloomberg to May.
Both Reuters and Bloomberg framed Tuesday's move as part of a wider international sell-off rather than a UK-specific event. Reuters reported 10-year yields tracking a rise in borrowing costs globally as another increase in oil prices reignited concerns about inflation, and noted that the gilt market was also playing catch-up with moves elsewhere following Monday's UK public holiday, when it was closed.
Traders also moved to price in more monetary tightening. Reuters reported the market pricing around 30 basis points of interest rate rises by the Bank of England by the end of the year. Two-year gilt yields, which are most sensitive to rate expectations, stood at around 4.59%, their highest since March.
Oliver Faizallah, head of fixed income research at Raymond James, told PA:
"While elevated bond yields are warranted given the inflationary and fiscal risks that are very clear and present, I also believe that the recent sell-off is fully pricing in these risks."
The rise builds on levels that were already elevated. A House of Commons Library research briefing recorded implied government borrowing costs in mid-August 2026 of around 5.05% for 10-year borrowing and 5.7% for 30-year borrowing, both above the rates of the early 2020s.
Higher yields feed through to the fiscal arithmetic the OBR will publish on Budget day. Simon French, economist at Panmure Liberum, estimated that the rise in 20-year gilt yields could reduce Healey's headroom against the fiscal rules by as much as £6bn, according to City A.M. That is a single analyst's estimate rather than an official figure. At the November 2025 Budget, the OBR assessed the previous chancellor's fiscal mandate — for the current budget to be in balance in 2029-30 — as met by a margin of £22bn, or 0.6% of GDP.
Bank Rate stands at 3.75%, held by the Monetary Policy Committee on 30 July. The next decision is due on 17 September, six weeks before the Budget.
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