Long-term British government bond yields reach their highest levels since 1998.

Long-term borrowing costs in the United Kingdom have risen to their highest level since 1998, more than 25 years ago, after British government bond yields surged to a record high during trading on Tuesday. The yield on 30-year UK government bonds increased to 5.22%, a level not seen since 1998. This comes at a time when the British Labour Party government is increasing domestic borrowing to improve public services and fund major infrastructure projects, despite having limited financial flexibility, with only £9.9 billion against its main financial base. This follows British Treasury Secretary Rachel Reeves' commitment not to raise taxes again, although some government members, including Prime Minister Keir Starmer, have suggested otherwise. However, this sharp increase in long-term debt costs in Britain has raised concerns that the Treasury may eventually need to raise taxes again to meet financial targets. The increase in British government bond yields followed the UK Debt Management Office's sale of £2.25 billion of 30-year bonds on Tuesday, but demand for them was weaker compared to recent auctions. At the same time, yields on short-term government bonds also rose, reflecting concerns about higher-than-expected interest rates that the Bank of England may have to implement in response to extremely expansionary fiscal policies, which continue to support economic activity and threaten to keep inflation at elevated levels.