UK government borrowing costs hit 5% as Iran war fuels bond market sell-off

City traders are betting the Bank of England could be forced to raise interest rates more aggressively than in the US or the eurozone. Photograph: Jill Mead/The Guardian

UK government borrowing costs have risen above 5% amid an intensifying global bond market sell-off fuelled by the Iran war.

The yield – or interest rate – on 10-year debt hit its highest level since the 2008 financial crisis, rising 13 basis points to 5.081%, as investors acted on concerns about the economic fallout from the conflict.