{"id":118131,"date":"2026-05-15T14:10:48","date_gmt":"2026-05-15T14:10:48","guid":{"rendered":"https:\/\/sotnews.agency\/?p=118131"},"modified":"2026-05-15T14:10:48","modified_gmt":"2026-05-15T14:10:48","slug":"uk-borrowing-costs-rise-and-pound-falls-as-leadership-drama-continues","status":"publish","type":"post","link":"https:\/\/sotnews.agency\/?p=118131","title":{"rendered":"UK borrowing costs rise and pound falls as leadership drama continues"},"content":{"rendered":"
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\n \t<\/i> Read Time:<\/span>3 Minute, 12 Second <\/div>\n\n <\/div>
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UK government borrowing costshave reached a new 18-year high and the pound has fallen as the battle for the Labour leadership took another twist with Andy Burnham\u2019s decision to fight a by-election.<\/p>\n

While other European government borrowing costs also rose, the UK movements have been greater, which analysts said had been fuelled by market concerns that a Burnham-led government would increase borrowing.<\/p>\n

The 10-year bond yield \u2013 effectively the interest rate charged to the UK government for a 10-year loan \u2013 rose above 5.14% at one point on Friday, the highest since 2008.<\/p>\n

The pound fell 0.3% against the dollar to around $1.337, having fallen sharply late on Thursday after Burnham\u2019s announcement.<\/p>\n

Kathleen Brooks, research director at XTB, said the falls meant the pound was 1.5% lower this week.<\/p>\n

\u201cThis is a sign that Burnham is the least market-friendly of all the candidates, as Wes Streeting\u2019s resignation did not have the same negative effect on the pound,\u201d she said.<\/p>\n

Over the past week 10-year yields have surpassed levels last reached in 2008 three times, including the new high reached on Friday.<\/p>\n

Long-term borrowing costs also roseto a new 28-year high, with the yield on 30-year gilts climbing to a peak of5.82%.<\/p>\n

Borrowing costs for other governments also rose on Friday, as worries persist about how the Iran war could push up inflation due to the surge in energy costs.<\/p>\n

The price of global oil benchmark Brent crude surged on Friday morning to over $109 a barrel \u2013 up from $105.72 on Thursday \u2013 before easing to around $108.10 by 12:30 BST.<\/p>\n

However, investors consider that a government led by Burnham would be more likely to increase Britain\u2019s already high public borrowing.<\/p>\n

In an interview with the New Statesman last year, Burnham said the government had to \u201cget beyond this thing of being in hock to the bond markets\u201d.<\/p>\n

AJ Bell investment director Russ Mould said while there was no guarantee Burnham would win a seat in parliament or contest the leadership, his New Statesman comment had \u201chelped push UK borrowing costs higher and seen the pound slump\u201d.<\/p>\n

\u201cA process involving Burnham also promises to be more protracted and \u2018noisy\u2019, thereby prolonging and exacerbating the uncertainty about the political situation in the UK,\u201d he said.<\/p>\n

Brooks said the two key factors affecting the pound and government borrowing costs were the prospect of a shift to the left in government, and the uncertainty around the current leadership turmoil.<\/p>\n

\u201cOverall, UK politics is a mess, there are already signs that foreign buyers are ditching the gilt market. If there is a major rout in the pound and\/or gilts in the coming days, prospective candidates may need to assess whether now was a wise time to make a move against the PM,\u201d she said.<\/p>\n

Jefferies economist Mohit Kumar told Reuters: \u201cMarket\u2019s fear is that Burnham would be more left leaning, and we could see further increase in deficits.\u201d<\/p>\n

UK stocks also fell on Friday, with the benchmark FTSE 100 index down 1.7%, although other European markets fell by a similar amount.<\/p>\n

Burnham, the mayor of Greater Manchester, confirmed he would run for a seat in parliament after MP Josh Simons said he would stand down to make way for the leadership hopeful.<\/p>\n

\u201cWe will change Labour for the better and make it a party you can believe in again,\u201d Burnham said in a statement on Thursday evening, vowing to \u201cmake politics work properly for people\u201d.<\/p>\n

But his tilt at the top political job is far from a done deal. He will need the local party to select him as a candidate for the constituency of Makerfield, and then would need to win the by-election in a race that could be close with Reform UK.<\/p>\n<\/div>\n

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UK government borrowing costshave reached a new 18-year high and the pound has fallen as the battle for the Labour leadership took another twist with Andy Burnham’s decision to fight a by-election.<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_2277560469115098_106292521332774":"","twitter_aToxNzczMzI3Njk4OTg4ODUxMjAxOw==_1773327698988851200":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[17047,1910,10,9,1893],"tags":[],"class_list":["post-118131","post","type-post","status-publish","format-standard","hentry","category-drama","category-international","category-politics","category-popular","category-uk"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts\/118131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=118131"}],"version-history":[{"count":0,"href":"https:\/\/sotnews.agency\/index.php?rest_route=\/wp\/v2\/posts\/118131\/revisions"}],"wp:attachment":[{"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=118131"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=118131"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sotnews.agency\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=118131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}