By Aysu Bicer
LONDON (AA) - Britain's long-term borrowing costs surged to levels not seen since 1998, as the yield on 30-year British government bonds reached its highest in more than 25 years Friday.
The yield on 30-year British government bonds climbed to 5.119%, an increase of 4 basis points during the trading session.
The recent surge in yields takes the rate above a previous peak of 5.115% that was recorded Oct. 4.
The rise in borrowing costs comes as a notable development in UK financial markets, reflecting increasing concerns about inflation and its potential effect on the country's economic stability.
In data released earlier Friday, it was revealed that the government borrowing for September was lower than anticipated.
But Finance Minister Jeremy Hunt expressed concerns, noting that debt servicing costs are expected to double this year due to rising interest rates and inflation, a situation he deemed as "clearly unsustainable."
Since December 2021, the Bank of England (BoE) has increased its interest rate 14 times, bringing it to the current level of 5.25%.
But market sentiment suggests the BoE may be hitting the pause button, with a 13% probability of another rate hike at its upcoming meeting Nov. 2.