Britain issues costliest five-year debt since 2008 in run-up to budget – as it happened
News Source
•Tue, 27 Oct 2026 16:56:09 GMT
📰 What Happened
Britain sold £4.5bn of five-year government debt on Tuesday at an interest rate of 5.036%. That is the highest since 2008, when the global financial crisis hit. Investors offered to buy 3.51 times the amount on sale.
The sale came the day before chancellor John Healey delivers his first budget. City analysts said the high cost shows how little room the government has to borrow more.
In the same session, HSBC posted a 32% rise in quarterly profits to $9.6bn and said it would hand $2.7bn to shareholders. Its shares fell more than 5%, and Shell overtook it as London's most valuable company.
🔍 The Backstory
Government bonds, called gilts, are how Britain borrows money. When investors demand a higher yield, the state pays more interest on every pound, and that cost lasts for years.
Yields have climbed since 2022, when inflation surged and the Bank of England raised rates. The 10-year gilt now yields about 5.35%. Higher rates also lift mortgage and business loan costs.
Other warnings piled up before the budget. Shop price inflation reached its highest level since 2024, and a record 738,000 UK businesses were said to be in serious financial trouble.
🎯 Why It Matters
Higher borrowing costs leave less money for schools, hospitals and benefits, and they feed into mortgages and rents. A tense budget can reach household bills fast.
Britain sold £4.5bn of five-year government debt on Tuesday at an interest rate of 5.036%. That is the highest since 2008, when the global financial crisis hit. Investors offered to buy 3.51 times the amount on sale.
The sale came the day before chancellor John Healey delivers his first budget. City analysts said the high cost shows how little room the government has to borrow more.
In the same session, HSBC posted a 32% rise in quarterly profits to $9.6bn and said it would hand $2.7bn to shareholders. Its shares fell more than 5%, and Shell overtook it as London's most valuable company.
Government bonds, called gilts, are how Britain borrows money. When investors demand a higher yield, the state pays more interest on every pound, and that cost lasts for years.
Yields have climbed since 2022, when inflation surged and the Bank of England raised rates. The 10-year gilt now yields about 5.35%. Higher rates also lift mortgage and business loan costs.
Other warnings piled up before the budget. Shop price inflation reached its highest level since 2024, and a record 738,000 UK businesses were said to be in serious financial trouble.
Higher borrowing costs leave less money for schools, hospitals and benefits, and they feed into mortgages and rents. A tense budget can reach household bills fast.