LONDON — British government bond yields rose to their highest level in 18 years on Wednesday as surging oil prices intensified concerns over inflation amid the escalating Iran conflict.
The yield on 10-year UK government bonds, or gilts, climbed to 5.268%, up four basis points shortly after 0700 GMT, reaching its highest level since June 2008, according to Reuters.
The increase came as government bond markets globally faced renewed selling pressure, driven by concerns that higher energy prices could fuel inflation and keep interest rates elevated for longer.
Rising gilt yields increase the government’s borrowing costs and could further strain Britain’s public finances through higher debt-servicing expenses.
The move comes as Prime Minister Andy Burnham and Finance Minister John Healey prepare for their first budget next month, adding pressure on the government as it seeks to manage borrowing costs and public spending.
Higher oil prices linked to the Iran conflict have increased concerns about the economic outlook, with investors closely watching whether energy costs will translate into broader and more persistent inflationary pressures.