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UK Borrowing Costs Hit 18-Year High
UK borrowing costs reached their highest level since 2008. The government deficit rose to £14.3 billion in February.
The deficit is the gap between what the government earns and spends. The Bank of England kept interest rates steady on Thursday.
But the bank hinted at future rate rises. Markets now expect up to 3 rate rises in 2026.
This means borrowing costs will likely stay high. On Friday, investors sold UK bonds. Concerns included the Iran conflict and rising costs.
Klear Note — A deficit means government spends more money than it earns. Higher borrowing costs make it more expensive for the UK to borrow money.
Key Terms 4
- borrowing costs
- the interest the government pays when it borrows money
- bonds
- loans investors give to the government in exchange for interest payments
- interest rates
- the cost of borrowing money, set by the Bank of England
- Bank of England
- the UK's central bank that controls interest rates