UK borrowing costs hit highest since 2008 as markets expect up to three interest rate rises

Deficit rises unexpectedly to £14.3bn in February as stock markets slide amid fears that Iran war will escalate UK government borrowing costs have reached their highest level since 2008, while financial markets now expect up to three interest rate rises this year as investors digest the impact of the Iran conflict. The yield, or interest rate, on 10-year borrowing was pushed to heights not seen since the global financial crisis, as investors dumped UK government bonds. The market move followed the Bank of England’s decision on Thursday to leave interest rates on hold at 3.75% and hint at a future increase. By Friday, markets were pricing in as many as three interest rate rises in 2026. Higher gilt yields create a headache for the chancellor, Rachel Reeves, by pushing up the cost of servicing the government’s debt pile. The 10-year yield was 5% at close of trade – the highest level since the depths of the global financial crisis in mid-2008. Meanwhile, stock markets on both sides of the Atlantic slid as investors digested a report that the US is to send more troops to the Middle East. On Friday, the Axios website reported the US was considering plans to occupy or blockade Iran’s Kha