Medium-term borrowing costs for UK government hit 19-year high
Summary
The UK government’s costs to borrow money for the medium term have reached their highest level in 19 years because investors are selling bonds due to inflation fears. This increase in borrowing costs may force Chancellor John Healey to raise taxes in his upcoming budget to maintain financial stability and fund energy support measures.Key Facts
- The interest rate on 10-year UK government bonds rose to 5.515%, the highest since July 2007.
- Yields on 20- and 30-year UK government bonds are at their highest levels since 1998.
- Higher yields mean the government has to pay more in interest to borrow money.
- Rising borrowing costs likely reduced the government’s financial buffer built earlier this year by about half.
- Chancellor Healey is expected to raise taxes to rebuild the government’s financial cushion and fund energy support like a VAT cut on electricity bills.
- Economists warn that raising taxes too much could hurt the economy.
- The Bank of England is expected to raise interest rates again in November to fight inflation.
- Similar bond sell-offs and inflation concerns are affecting other major economies, including the US and France.
Read the Full Article
This is a fact-based summary from The Actual News. Click below to read the complete story directly from the original source.
