UK Gilt Yields Hit Multi-Decade Highs Amid Global Bond Rout

UK 10-year gilt yields have climbed to their highest levels since 2008, while 30-year yields jumped 9 basis points to 5.88%, the highest mark since March 1998. The Government of the United Kingdom is now projected to spend approximately 3.7% of national income on debt interest payments alone.

This surge is part of a broader global bond rout fueled by rising oil prices, with Brent crude reaching $92.1 a barrel. Market analysts attribute the volatility to sticky inflation, high budget deficits—estimated at 4% of GDP for the UK and 6% for the US—and a rise in economic populism favoring expansionary fiscal policies.

Additional pressure comes from private sector competition for capital, particularly from AI firms expected to borrow $500 billion for data center expansion. Thomas Pugh, chief economist at RSM UK, noted that while bond yields are surging globally, the UK continues to pay higher interest rates than similar countries, indicating that investors perceive the UK as a riskier environment for capital.