UK Long-Term Borrowing Costs Surge to Highest Level Since 1998

Yields on 30-year UK government bonds have surged to their highest level since 1998, driven by expectations of aggressive tightening by the Bank of England (BoE). This upward pressure was further reinforced by fresh economic data showing the UK Services PMI climbed to 52.7 in April, up from 51.5 in March. Additionally, the UK Composite PMI improved to 52.6 from 50.3, signaling regained momentum in domestic private sector activity. These signs of economic resilience suggest that inflationary pressures may persist, supporting the case for higher-for-longer interest rates. While market jitters persist ahead of the upcoming elections, the rebound in activity adds a new layer of complexity for debt markets. The multi-decade highs in yields represent a fundamental shift that substantially increases public debt servicing costs and impacts the broader mortgage market.