Britain pays its highest gilt yield since 1999 as bond market turmoil squeezes Burnham's Budget room

From the Newshound archive · first published 29 September 2026 · last updated 30 September 2026.

The UK government has sold £4.25bn of ten-year gilts at a yield of 5.38% — the highest rate at such an auction in 27 years — leaving Chancellor John Healey with far less fiscal headroom to fund Labour's agenda ahead of the October 28 Budget. Wider turbulence in global bond markets, driven in part by surging oil prices after Trump's Iran war pushed Brent crude to nearly $109 a barrel, has compounded domestic worries about whether Burnham will get borrowing under control. At Labour conference, Healey acknowledged that servicing Britain's near-£3tn national debt now consumes more than the combined budgets of the Home Office, defence and justice. The growing interest burden threatens to crowd out Burnham's flagship pledges on social care reform, council housebuilding and increased public spending.

The 5.38% yield marks the most expensive ten-year borrowing Britain has faced since September 1999 — a 27-year record.

City analysts caution that the pressure could trigger yet another tax raid on top of the £75bn in hikes under Rachel Reeves.