UK bond yields reach 5.515% as Chancellor Healey faces choices
The U.K.'s borrowing costs just shot up, with 10-year government bond yields reaching 5.515%, a level not seen since 2007.
This happened because global investors are worried about inflation, which led to a big sell-off in bonds and pushed yields even higher.
With longer-term bonds also spiking, Chancellor John Healey faces some tough choices ahead of his budget later this month.
Half of £24bn safety net threatened
Rising borrowing costs might wipe out around half of the £24 billion safety net left by the last chancellor, so the government could consider raising taxes or tweaking policies like VAT on electricity bills to fill the gap.
Experts say it is a tricky balance: raise taxes too much and it could hurt jobs and spending.
Some analysts think fewer interest rate hikes from the Bank of England next year might help calm things down, but for now, inflation worries are keeping everyone on edge.