{"id":1936728,"date":"2026-05-15T08:48:07","date_gmt":"2026-05-15T05:48:07","guid":{"rendered":"https:\/\/analyse.optim.biz\/?p=1936728"},"modified":"2026-05-15T08:48:07","modified_gmt":"2026-05-15T05:48:07","slug":"uk-borrowing-costs-rise-and-pound-falls-as-leadership-drama-continues","status":"publish","type":"post","link":"https:\/\/analyse.optim.biz\/?p=1936728","title":{"rendered":"UK borrowing costs rise and pound falls as leadership drama continues"},"content":{"rendered":"

[analyse_image type=”featured” src=”https:\/\/ichef.bbci.co.uk\/news\/1024\/branded_news\/4109\/live\/013e27b0-5037-11f1-948b-c3db1a508f68.jpg”]<\/p>\n

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UK government borrowing costshave reached a new 18-year high and the pound has fallen as the battle for the Labour leadership took another twist with Andy Burnham’s decision to fight a by-election.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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While other European government borrowing costs also rose, the UK movements have been greater, which analysts said had been fuelled by market concerns that a Burnham-led government would increase borrowing.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The 10-year bond yield – effectively the interest rate charged to the UK government for a 10-year loan – rose above 5.14% at one point on Friday, the highest since 2008.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The pound fell 0.3% against the dollar to around $1.337, having fallen sharply late on Thursday after Burnham’s announcement.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Kathleen Brooks, research director at XTB, said the falls meant the pound was 1.5% lower this week.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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“This is a sign that Burnham is the least market-friendly of all the candidates, as Wes Streeting’s resignation did not have the same negative effect on the pound,” she said.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Over the past week 10-year yields have surpassed levels last reached in 2008 three times, including the new high reached on Friday.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Long-term borrowing costs also roseto a new 28-year high, with the yield on 30-year gilts climbing to a peak of5.82%.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Borrowing costs for other governments also rose on Friday, as worries persist about how the Iran war could push up inflation due to the surge in energy costs. <\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The price of global oil benchmark Brent crude surged on Friday morning to over $109 a barrel – up from $105.72 on Thursday – before easing to around $108.10 by 12:30 BST.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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However, investors consider that a government led by Burnham would be more likely to increase Britain’s already high public borrowing.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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In an interview with the New Statesman last year, Burnham said the government had to “get beyond this thing of being in hock to the bond markets”.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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AJ Bell investment director Russ Mould said while there was no guarantee Burnham would win a seat in parliament or contest the leadership, his New Statesman comment had “helped push UK borrowing costs higher and seen the pound slump”.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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“A process involving Burnham also promises to be more protracted and ‘noisy’, thereby prolonging and exacerbating the uncertainty about the political situation in the UK,” he said.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Brooks said the two key factors affecting the pound and government borrowing costs were the prospect of a shift to the left in government, and the uncertainty around the current leadership turmoil.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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“Overall, UK politics is a mess, there are already signs that foreign buyers are ditching the gilt market. If there is a major rout in the pound and\/or gilts in the coming days, prospective candidates may need to assess whether now was a wise time to make a move against the PM,” she said.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Jefferies economist Mohit Kumar told Reuters: “Market’s fear is that Burnham would be more left leaning, and we could see further increase in deficits.”<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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UK stocks also fell on Friday, with the benchmark FTSE 100 index down 1.7%, although other European markets fell by a similar amount.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Burnham, the mayor of Greater Manchester, confirmed he would run for a seat in parliament after MP Josh Simons said he would stand down to make way for the leadership hopeful.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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“We will change Labour for the better and make it a party you can believe in again,” Burnham said in a statement on Thursday evening, vowing to “make politics work properly for people”.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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But his tilt at the top political job is far from a done deal. He will need the local party to select him as a candidate for the constituency of Makerfield, and then would need to win the by-election in a race that could be close with Reform UK.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n

[analyse_source url=”https:\/\/www.bbc.com\/news\/articles\/czr2pl5lj84o”]<\/p>\n","protected":false},"excerpt":{"rendered":"

[analyse_image type=”featured” src=”https:\/\/ichef.bbci.co.uk\/news\/1024\/branded_news\/4109\/live\/013e27b0-5037-11f1-948b-c3db1a508f68.jpg”] EPA UK government borrowing costshave reached a new 18-year high and the pound has fallen as the battle for the Labour leadership took another twist with Andy Burnham’s decision to fight a by-election. While other European government borrowing costs also rose, the UK movements have been greater, which analysts said had been […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[35,226],"class_list":["post-1936728","post","type-post","status-publish","format-standard","hentry","category-politics","tag-bbc-com","tag-crawlmanager"],"_links":{"self":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts\/1936728","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1936728"}],"version-history":[{"count":0,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts\/1936728\/revisions"}],"wp:attachment":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1936728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1936728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1936728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}