UK government borrowing costs hit their highest level since 2008 as inflation fears hit the gilt market

In this article

British government borrowing costs surged to their highest since the 2008 financial crisis on Friday, as investors scrambled to price in rising inflation risks and a growing probability of interest rate hikes later this year.

U.K. government bonds – known as gilts – have undergone a sharp repricing amid the escalation of the Iran war. Yields on the benchmark 10-year gilt have jumped around 68 basis points in the 15 trading days since the conflict began, while the yield on the 2-year gilt has added about 97 basis points.

Bond prices and yields move in opposite directions.

On Friday, the yield on the U.K.’s 10-year government bonds