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New threat to Labour spending plans as UK long-term borrowing costs hit highest level since 1998

Inflation fears fuelled by Iran war and renewed uncertainty over Starmer’s leadership prompt bond sell-off

The risk to Labour’s tax and spending plans from the war in Iran was underscored on Tuesday, as long-term government borrowing costs hit their highest level since 1998.

Fears of higher inflation as a result of the conflict have fuelled a selloff across government bond markets, which City analysts say has been exacerbated in the UK by uncertainty about the future of Keir Starmer’s government.

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May 10, 2026 Gilts Bonds Economics

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