Pressure rises on Reeves as government borrowing costs hit 27-year high

"The yield, or interest rate, on 30-year UK government debt hit 5.680% on Tuesday morning. That is its highest level since 1998, indicating that it will cost the UK more to borrow from the markets, above the previous 27-year high of 5.649% set in April. Yields, which rise when a bond's price falls, are a measure of the interest rate which investors demand when lending to a government or company."

"This pushed the gold price up to a new record high of $3,508 (2,607) an ounce on Tuesday, while silver rose over $40 an ounce for the first time since 2011. Anxiety over fiscal sustainability are another factor, with Donald Trump's recent tax cuts and spending bill expected to add trillions of dollars to the US national debt. In the UK, opposition to proposed welfare cuts have highlighted the challenge in cutting government spending."

"The rise in borrowing costs came as the City digested Keir Starmer's decision to reshuffle his Downing Street organisation on Monday, including putting Darren Jones, the chief secretary to the Treasury, in charge of day-to-day delivery of the prime minister's priorities. The immediate market reaction is not exactly a vote of confidence on these moves, said Simon French, the chief economis"

UK 30-year government bond yields rose to 5.680%, the highest level since 1998, raising the cost of long-term borrowing. Yields have climbed amid a global sell-off in long-term government bonds and rising inflationary expectations that push investors to demand higher returns. Safe-haven buying lifted gold to a record $3,508 an ounce and pushed silver above $40 an ounce. Concerns about fiscal sustainability, including large US tax cuts and spending and domestic UK resistance to welfare cuts, intensify pressure on the Treasury. Higher borrowing costs reduce fiscal headroom and may force tax increases or spending cuts to meet fiscal targets.

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