STORY
The cost of long term Government borrowing has risen to its highest level in 28 years amid a wider sell off in global bond markets. The yield on 30 year UK Government bonds climbed to 5.89 per cent on Tuesday, its highest level since February 1998.
The yield on ten year Government bonds also rose to 5.246 per cent, reaching a level last recorded in June 2008. Bond yields increase when prices fall and determine the rate that governments must offer investors when raising new money.
The movement followed renewed increases in global oil prices, which contributed to concerns about inflation and future interest rates. Higher borrowing costs could place additional pressure on the Government’s finances because more public money must be used to service newly issued debt.