UK borrowing costs have hit their highest level since the banking crisis. An economist explains what’s happening

If the Bank of England slows the pace of interest rate cuts the cost of borrowing will stay higher for longer. Nigel J. Harris/Shutterstock

UK borrowing costs have risen rapidly to their highest level since the banking crisis of 2007-08, with implications for the government’s tax and spending plans. Yields on gilts, as UK government bonds are called, have been rising – and these yields are effectively the level of interest that the government pays on its borrowing.

The yield on ten-year debt hit 4.82%, the highest since 2008. And the yield on 30-year gilts rose to 5.383% on January 8, which is the highest for 27 years.