{"id":40050,"date":"2026-05-15T23:23:09","date_gmt":"2026-05-16T03:23:09","guid":{"rendered":"https:\/\/sharewatch.com\/wp\/2026\/05\/15\/uk-borrowing-costs-rise-and-pound-falls-as-leadership-drama-continues\/"},"modified":"2026-05-15T23:23:09","modified_gmt":"2026-05-16T03:23:09","slug":"uk-borrowing-costs-rise-and-pound-falls-as-leadership-drama-continues","status":"publish","type":"post","link":"https:\/\/sharewatch.com\/wp\/2026\/05\/15\/uk-borrowing-costs-rise-and-pound-falls-as-leadership-drama-continues\/","title":{"rendered":"UK borrowing costs rise and pound falls as leadership drama continues"},"content":{"rendered":"
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Rachel Clun<\/span>Business reporter<\/span><\/p>\n<\/div>\n

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Getty Images<\/span><\/p>\n<\/div>\n<\/figure>\n<\/div>\n

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UK government borrowing costs <\/b>have 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

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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

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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 5.17% <\/b>at one point on Friday, the highest since 2008.<\/p>\n<\/div>\n

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The pound fell 0.3% against the dollar to around <\/b>$1.336, having fallen sharply late on Thursday after Burnham’s announcement.<\/p>\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

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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

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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

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Long-term borrowing costs also rose <\/b>to a new 28-year high, with the yield on 30-year gilts climbing to a peak of 5.84% by early Friday afternoon.<\/p>\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

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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 below $108 in the afternoon.<\/p>\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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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","protected":false},"excerpt":{"rendered":"

6 hours ago Rachel ClunBusiness reporter Getty Images UK government borrowing costs have 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, […]<\/p>\n","protected":false},"author":1,"featured_media":40051,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ocean_post_layout":"","ocean_both_sidebars_style":"","ocean_both_sidebars_content_width":0,"ocean_both_sidebars_sidebars_width":0,"ocean_sidebar":"","ocean_second_sidebar":"","ocean_disable_margins":"enable","ocean_add_body_class":"","ocean_shortcode_before_top_bar":"","ocean_shortcode_after_top_bar":"","ocean_shortcode_before_header":"","ocean_shortcode_after_header":"","ocean_has_shortcode":"","ocean_shortcode_after_title":"","ocean_shortcode_before_footer_widgets":"","ocean_shortcode_after_footer_widgets":"","ocean_shortcode_before_footer_bottom":"","ocean_shortcode_after_footer_bottom":"","ocean_display_top_bar":"default","ocean_display_header":"default","ocean_header_style":"","ocean_center_header_left_menu":"","ocean_custom_header_template":"","ocean_custom_logo":0,"ocean_custom_retina_logo":0,"ocean_custom_logo_max_width":0,"ocean_custom_logo_tablet_max_width":0,"ocean_custom_logo_mobile_max_width":0,"ocean_custom_logo_max_height":0,"ocean_custom_logo_tablet_max_height":0,"ocean_custom_logo_mobile_max_height":0,"ocean_header_custom_menu":"","ocean_menu_typo_font_family":"","ocean_menu_typo_font_subset":"","ocean_menu_typo_font_size":0,"ocean_menu_typo_font_size_tablet":0,"ocean_menu_typo_font_size_mobile":0,"ocean_menu_typo_font_size_unit":"px","ocean_menu_typo_font_weight":"","ocean_menu_typo_font_weight_tablet":"","ocean_menu_typo_font_weight_mobile":"","ocean_menu_typo_transform":"","ocean_menu_typo_transform_tablet":"","ocean_menu_typo_transform_mobile":"","ocean_menu_typo_line_height":0,"ocean_menu_typo_line_height_tablet":0,"ocean_menu_typo_line_height_mobile":0,"ocean_menu_typo_line_height_unit":"","ocean_menu_typo_spacing":0,"ocean_menu_typo_spacing_tablet":0,"ocean_menu_typo_spacing_mobile":0,"ocean_menu_typo_spacing_unit":"","ocean_menu_link_color":"","ocean_menu_link_color_hover":"","ocean_menu_link_color_active":"","ocean_menu_link_background":"","ocean_menu_link_hover_background":"","ocean_menu_link_active_background":"","ocean_menu_social_links_bg":"","ocean_menu_social_hover_links_bg":"","ocean_menu_social_links_color":"","ocean_menu_social_hover_links_color":"","ocean_disable_title":"default","ocean_disable_heading":"default","ocean_post_title":"","ocean_post_subheading":"","ocean_post_title_style":"","ocean_post_title_background_color":"","ocean_post_title_background":0,"ocean_post_title_bg_image_position":"","ocean_post_title_bg_image_attachment":"","ocean_post_title_bg_image_repeat":"","ocean_post_title_bg_image_size":"","ocean_post_title_height":0,"ocean_post_title_bg_overlay":0.5,"ocean_post_title_bg_overlay_color":"","ocean_disable_breadcrumbs":"default","ocean_breadcrumbs_color":"","ocean_breadcrumbs_separator_color":"","ocean_breadcrumbs_links_color":"","ocean_breadcrumbs_links_hover_color":"","ocean_display_footer_widgets":"default","ocean_display_footer_bottom":"default","ocean_custom_footer_template":"","ocean_post_oembed":"","ocean_post_self_hosted_media":"","ocean_post_video_embed":"","ocean_link_format":"","ocean_link_format_target":"self","ocean_quote_format":"","ocean_quote_format_link":"post","ocean_gallery_link_images":"on","ocean_gallery_id":[],"footnotes":""},"categories":[19,21,20],"tags":[],"class_list":["post-40050","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-market","category-news","entry","has-media"],"_links":{"self":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/posts\/40050","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/comments?post=40050"}],"version-history":[{"count":0,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/posts\/40050\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/media\/40051"}],"wp:attachment":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/media?parent=40050"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/categories?post=40050"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/tags?post=40050"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}