UK borrowing costs jump again on fears Iran conflict will curb growth
UK borrowing costs jumped for a second day on Tuesday as the potentially damaging effects of the Iran conflict spooked investors concerned that growth will stall across the major industrial economies.Investors fear inflation will rise, driven by rising oil and gas prices, hitting businesses and households just as they are recovering from a long period of elevated inflation.Analysts said higher energy costs were likely to lead to price rises, forcing central banks to delay expected cuts in interest rates until later this year.Brent crude passed $83 a barrel on Tuesday, up from about $60 in December.The government had hoped that last month’s decline in inflation to 3% and a faster fall in Whitehall’s annual spending deficit would further push down the interest on UK debt.
However, the better-than-expected borrowing figures trumpeted by Rachel Reeves in her spring forecast speech on Tuesday failed to generate a positive bounce amid growing anxiety over the Middle East crisis.Since the conflict broke out at the weekend, market bets for Bank of England policymakers to cut interest rates when they next meet on 19 March have fallen from 80% to just 30%.Government borrowing costs have been on the rise.Yields on two-year gilts – effectively the interest rate – jumped as much as 16 basis points to 3.8% on Tuesday, although they later eased back to settle at nearer 10 points up.
David Aikman, director of the National Institute of Economic and Social Research, said: “The UK’s improved borrowing position announced in today’s spring statement has been overshadowed by the Middle East crisis.“If the crisis persists, higher energy prices will feed through to inflation, increasing borrowing costs further, putting serious pressure on the [budget] outlook.”Kathleen Brooks, a research director at the currency trader XTB, said: “There is no denying that the spring statement was unfortunately timed.UK bond yields are soaring on Tuesday, and this time it is not Rachel Reeves’s fault.“UK two- and 10-year gilt yields are higher … as the bond market prices in the worst-case scenario of a prolonged war in the Middle East and an energy-price inflation shock.
”Paul Dales, the chief UK economist at Capital Economics, said the Bank of England was probably more sensitive to the upside risk to inflation from the conflict than other central banks.Last month the Bank’s monetary policy committee held rates at 3.75% after a majority of policymakers said they wanted to wait and see how quickly inflation would fall before making further reductions.In its spring forecast assessment of the outlook for borrowing costs over the next five years, the Office for Budget Responsibility (OBR) said they had fallen significantly, benefiting the public finances.However, the latest increases in bond yields reversed gains made since last month when the OBR carried out its assessment.
David Miles, the forecaster’s chief economist, said predictions that inflation would fall to target levels early this year had become “more uncertain” after jumps in oil and gas prices linked to recent attacks in the Middle East.He said: “I think what will happen to inflation is particularly uncertain in the past few days.As I mentioned earlier and we all know, there have been very large increases in gas prices and oil prices.“Our central expectation had been that inflation would fall back towards the Bank of England’s 2% target early this year and will be around that level at the end of the year.There must be more uncertainty around that right now.
”Britain plans to issue £252.1bn of government bonds in the 2026-27 financial year, according to the UK Debt Management OfficeThe total compares with primary dealers’ median forecast of £245bn of gilt issuance in a Reuters poll, down from £303.7bn of issuance in 2025-26.
Councils’ temporary housing costs to more than double by 2029-30, says LGA
The cost to councils of providing temporary accommodation for homeless people in England is projected to more than double to almost £4bn by 2029–30, the Local Government Association (LGA) has said.The national membership body for councils found that since 2017-18, local authorities across England had spent almost £1.5bn more on temporary accommodation (TA) than had been reimbursed in housing benefit from the government.Without intervention, this figure is set to balloon to £3.9bn in the next four years, the LGA said as it urged the government to take action to help councils facing soaring demand and funding pressures
Quarter of healthy years lost to breast cancer are due to lifestyle factors, research finds
More than a quarter of healthy years lost to breast cancer are due to lifestyle factors such as red meat intake and smoking, according to the largest study of its kind.The study, published in the Lancet Oncology, used data from population-based cancer registries to produce a comprehensive analysis of breast cancer and its risk factors.The data used, spanning from 1990 to 2023 from more than 200 countries, was also used to produce forecasts of trends regarding breast cancer up to 2050. In the UK, about one in seven women will develop the disease in their lifetime.New breast cancer cases in women are predicted to rise by a third globally, from 2
Scotland becomes first UK country to legalise water cremations
Scotland has become the first part of the UK to legalise hydrolysis, an environmentally friendly alternative to cremation or burial, reflecting increasing demand for more sustainable funeral arrangements.Also known as water cremation or aquamation, the process is already available in many parts of the world, and regulations approved by the Scottish parliament on Monday mark the most significant change to funeral law since cremation was introduced in 1902.Replicating the natural process of decomposition that occurs after burial, but over a much shorter period of time, hydrolysis uses a strong alkaline solution to break down the body of the deceased person.The body is immersed in water and 5% alkaline, such as potassium hydroxide, for three to four hours in a pressurised metal cylinder and heated to about 150C (300F).This dissolves the body tissue, leaving only bones, which are then dried and pulverised into white dust
UK surgeon cleared of antisemitism criticises GMC’s plan to challenge ruling
A surgeon who was cleared by a tribunal of alleged antisemitism and support for terrorism has accused his regulator of seeking a “politically acceptable” outcome after it announced it would appeal against the decision to the high court.Dr Ghassan Abu-Sittah, who gave testimony to the international criminal court on Israel’s assault on Gaza and is the rector of the University of Glasgow, was cleared of misconduct by the Medical Practitioners Tribunal Service (MPTS) in January.But the decision to appeal by the General Medical Council (GMC), which brought the case after a complaint by the lobby group UK Lawyers for Israel (UKLFI), means he is trying to crowdfund £150,000 to defend himself again.“When the MPTS rejected the allegations, I felt that a two-year period of continuous harassment and attempts to undermine my credibility, including my evidence before the ICC [international criminal court] and ICJ [international court of justice], had finally come to an end.” said Abu-Sittah
Labour council accuses minister of ‘moral bankruptcy’ over social care dispute
The housing, communities and local government secretary has been accused by a Labour council of showing “arrogance, indifference and moral bankruptcy” towards children in social care.In an unusually forthright attack, Labour leaders of Hartlepool council said they were “furious and appalled” at Steve Reed after a meeting with him last week. A cross-party delegation had asked the secretary of state for £3m to help alleviate the growing cost of social care.The town in County Durham is one of the most deprived in England. It has the third highest number of children in care per capita in the country
Most senior council officers in England say building work hit by delays
Almost two-thirds of senior council officers have said they are seeing construction projects delayed, despite the key role of local authorities in creating the wave of new housing and infrastructure promised by Labour.Before Rachel Reeves’s spring forecast on Tuesday, a survey of senior council officers showed that 40% do not think the local authority they work for is well placed to follow through on its construction plans.Local authority finances have been under sustained pressure for more than a decade. Labour recently announced a shake-up of the funding formula for England’s local councils, to redirect resources from affluent parts of the country towards more deprived areas.Among those surveyed, 64% reported project delays, with as many as 94% calling for more certainty about future financing – such as multi-year funding settlements
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