UK borrows billions at highest rate since 2008 ahead of budget

Britain just sold 4.5 billion pounds worth of five-year debt at a yield of 5.036 percent. This rate is the highest seen since 2008, pointing to heavy market pressure on the government right before its budget announcement.

Market Response

Investors showed strong interest during the gilt auction by bidding 3.51 times the amount of debt that was actually available for purchase. Experts now expect only a small increase in debt issuance because current projections point to higher financing needs.

Context

A gilt auction is a sale of government bonds issued by the British state to raise money from public and private investors. Bond yields move inversely to bond prices, so a higher yield means the government has to pay more interest to borrow money from the market.