UK’s borrowing costs rise as Reeves’s budget prompts fears of slower interest rate cuts

UK’s borrowing costs rise as Reeves’s budget prompts fears of slower interest rate cuts

Markets conclude higher level of public spending could lead to higher inflation, making cuts in Bank of England rate less likely

UK government borrowing costs have risen to their highest level this year as City investors bet Rachel Reeves’s budget would lead the Bank of England to adopt a more cautious approach to cutting interest rates.

The yield – in effect the interest rate – on benchmark 10-year UK government bonds rose by more than 0.15 percentage points to trade above 4.5% on Thursday, before falling back slightly, as financial markets reacted to Labour’s first budget in 14 years.

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