The UK government's long-term borrowing costs has reached their highest level since 1998. Interest rates on these 30-year government bonds increased to 5.72%, which is making it more expensive for the government to borrow money. There are expectations that Chancellor Rachel Reeves will increase taxes in the Budget later this year.
There seems to be a short-term UK government debt as of Tuesday. The UK Debt Management Office had sold a record £14bn of 10-year bonds. The pound also fell more than 1% against the dollar and sterling fell against the dollar to $1.3388, which is the lowest level against the US currency since 7 August. While in the US, 30-year Treasury bond yields rose to their highest.
The article states that geopolitical tensions, US President Donald Trump's trade policies and the upcoming confidence vote in the French government had led to borrowing costs for governments around the globe to go up.
I do not know much about it but it would be interesting to see how the vote in the French government pans out because I also saw in another article that the French government is basically collapsing.
Chancellor Rachel Reeves promises not to raise taxes such as income tax, VAT or national insurance on "working people," but raises the question of what taxes Reeves could raise in the autumn Budget?
There is a couple options:
1.) Extending the freeze on income tax thresholds, which is due to end in 2028
-Referred to as a "stealth tax"
-Over time as salaries rise, more people are dragged into paying higher rates
2.) Reforming property taxes
I am interested in seeing what Chancellor Rachel Reeves decides to do.
Edser, T. E. &. N. (2025, September 2). UK borrowing costs hit 27-year high adding to pressure on Reeves. https://www.bbc.com/news/articles/cy989njnq2wo
It's always so interesting to see how governments around the world are impacted by other governments and are also affected by US economic policies.
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