UK borrowing costs hit highest since 1998 amid Starmer uncertainty

Long-term UK borrowing costs have soared to the highest level in nearly three decades while the pound and stocks fell as investors braced for a potential change of leadership, with cabinet ministers urging Keir Starmer to quit . Starmer was consulting colleagues before a cabinet meeting on Tuesday morning after ministerial aides quit and more than 70 MPs publicly called for him to go. With investors worried about potential changes to the fiscal rigour of Starmer’s government, the yield – in effect the interest rate – on 30-year government bonds jumped 11 basis points to 5.794%, the highest since May 1998. The benchmark 10-year yield on UK government bonds (known as gilts) also rose 11 basis points to 5.11%, just below the highest levels since 2008 that it hit in March amid fears that the Iran war would stoke inflation. The pound dropped 0.5% to $1.354 and was 0.3% lower against the euro at 86.8p a euro. Neil Wilson, an investor strategist at Saxo Markets, said: “We could see a blowout in longer-dated gilts if this turns into a dogfight – political, fiscal and inflationary risks will rise. …