On May 12, 2026, UK 10-year gilt yields rose to 4.85%, the highest level since 1998, according to data from Tradeweb. This increase in long-term borrowing costs came amid political uncertainty, with reports that cabinet ministers have urged Prime Minister Keir Starmer to resign. The pound sterling fell 0.8% against the US dollar to $1.24, and the FTSE 100 index dropped 1.2%.
The rise in gilt yields reflects investor concerns about the UK's fiscal outlook and political stability. The yield on 30-year gilts also increased, reaching 5.2%, the highest since 2002. Analysts at Goldman Sachs noted that the market is pricing in a higher risk premium due to the political situation.
Chancellor of the Exchequer Rachel Reeves is scheduled to deliver a statement to Parliament on May 13, 2026, outlining the government's plans to address the fiscal challenges. The Office for Budget Responsibility (OBR) has warned that the UK's debt-to-GDP ratio could reach 100% by 2030 if current trends continue.
