UK government borrowing costs hit 5% as Iran war fuels bond market sell-off
UK government borrowing costs have risen above 5% amid an intensifying global bond market sell-off fuelled by the Iran war.The yield – or interest rate – on 10-year debt hit its highest level since the 2008 financial crisis, rising 13 basis points to 5.081%, as investors acted on concerns about the economic fallout from the conflict.Borrowing costs also rose for the US and eurozone governments, underscoring growing turbulence in the global financial system after Donald Trump’s extension of a deadline for a peace deal failed to soothe jittery investors.Financial markets worldwide slumped on Friday, extending falls seen since the outbreak of the war, with losses in London and across major US and EU trading hubs.
The price of Brent crude remained above $110 a barrel,Kathleen Brooks, the research director for the UK at the financial trading platform XTB, said: “Markets feel more panicky this week, and Friday’s price action suggests that investors are losing faith in Donald Trump’s ability to end this war and reach a deal with the Iranians,”As the US-Israeli war enters its second month, the pressure in markets reflects concern about an inflation shock triggered by the surge in energy prices amid the effective closure of the critical strait of Hormuz,Economists have said that given the reliance of the British economy on global trade and its sensitivity to oil and gas price rises, it could be damaged more than the economies of other industrialised nations by the Middle East conflict,City traders are betting the Bank of England could be forced to raise interest rates more aggressively than in the US or the eurozone to prevent stubbornly high rates of inflation from taking root, despite fears over the strength of the economy and a slowdown in the UK jobs market.
Financial markets are pricing in at least two interest rate rises in 2026 – contributing to the leap in government bond yields, which are sensitive to inflation and interest rate expectations.The increase in borrowing costs will add to the challenges facing Rachel Reeves, the chancellor, amid pressure on Labour to provide a package of financial support for households already reeling from a cost of living crisis.Economists have warned that the Bank could be forced to take a tough approach to tackling inflation after losing some of its credibility by underestimating the leap in inflationary pressures in 2022.The Bank was heavily criticised for its response to the inflation shock after the Covid pandemic and Russia’s full-scale invasion of Ukraine, when the headline rate peaked above 11% in October 2022, the highest level in four decades.Threadneedle Street then raised interest rates 14 times in a row.
Some economists have questioned whether the Bank could have done much differently, arguing that a sharper rise in borrowing costs would have done little to restrain the energy price shock while tipping the UK into a deep recession,Experts have suggested that the central bank could “look through” the latest energy price surge, warning that the fallout from the Middle East conflict is hitting the UK economy at a moment when it is substantially weaker than in 2022, with slower growth and rising unemployment,On Friday a survey by the National Institute of Economic and Social Research showed that several leading experts, including former Bank insiders, believed that stubbornly high inflation risked becoming entrenched amid dwindling trust in Threadneedle Street to hit its 2% target,“Overall, the panel favoured a tighter interest rate path in the UK, with credibility being cited as a contributing concern,” the thinktank said,Charlie Bean, a former deputy governor of the Bank, said its monetary policy committee (MPC) had taken the right approach to hold interest rates unchanged at 3.
75% last week amid elevated uncertainty over the fallout and duration of the Iran conflict.However, he said the damage to its reputation could force it to err on the side of caution.“As there is a perception that the Bank was a little tardy in tightening policy back in 2022-23, it is important that MPC are vigilant and act promptly if needed this time around in order to reinforce the committee’s credibility,” he said.
Ministers consider charging tourists to enter national museums in England
Ministers are considering charging international tourists to access permanent collections at national museums as part of an initiative to improve arts funding.The government said there was a need for long-term options to fund the struggling arts sector in its response to a review of Arts Council England, which distributes public funding to the arts. Among the options cited was a hotel levy, a policy being consulted on.But Alison Cole, the director of the Cultural Policy Unit thinktank, said charging international tourists would be a “very bad idea”.“There’s a much better way to save our wonderful civic museums and cultural infrastructure across the country, and that we believe is a hotel levy,” she said
Jimmy Kimmel on Trump’s election integrity push: ‘Like Bill Cosby telling you he’ll watch your drink for you’
Late-night hosts mocked Donald Trump’s mail-in voting as he tries to end mail-in voting, ICE agents in US airports and a mysterious “gift” from Iran.On Tuesday’s Jimmy Kimmel Live!, the host checked in on Donald Trump’s efforts to pass the so-called Save America act. The sweeping restrictive voting bill would require proof of US citizenship for new voters and end mail-in voting, or what Trump called “mail-in cheating”.“That’s right, he prefers in-person cheating,” Kimmel quipped.“He keeps saying that it was brought to his attention today that we’re the only country that does mail-in voting – when is someone going to step in and tell him that’s not true?” he continued
Who’s Afraid of Virginia Woolf? at 60: Elizabeth Taylor still crackles with feral energy
After a long day at work, we may not instinctively leap to films about toxic marriages and relationship breakdowns – but by God they can make good drama. Blue Valentine, The Squid and the Whale and A Separation are some of the great portraits of love turned septic. But perhaps greatest of all is Mike Nichols’ directorial debut – a sizzling adaptation of Edward Albee’s legendary Who’s Afraid of Virginia Woolf?, which arrived in 1966, four years after the play, and helped cement it in the zeitgeist.The film was nominated for every eligible Academy award and won five, including best actress for Elizabeth Taylor, who delivers a searing performance as the ferocious yet vulnerable Martha. It’s lost none of its gut-busting charge today and her brilliantly performed experience still crackles with emotional electricity
Punk masks, Walkmans and Choppers: Museum of Youth Culture to open in London
In the basement of a new-build housing block in Camden, the ventilation system is working flat out. The fans whir like a chainsaw orchestra bouncing around the concrete room as they attempt to deal with a slight damp problem. “This is what it’d sound like if there was a fire!” shouts Jon Swinstead, the driving force behind the Museum of Youth Culture, as he tries to make himself heard above the din.It’s hard to imagine but in a few weeks this empty, slightly soggy space will be transformed into an institution dedicated to all things teenage – a project Swinstead has been working on in one way or another for almost 30 years.Opening on 15 May, the museum has amassed a 100,000-item archive that tells the story of British youth subcultures from mods and rockers, to ravers and emo
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‘In series one, it was bullying, drugs and alcohol. Twenty years on, it’s vapes, cyber-bullying and bloody energy drinks’I was working on women’s prison drama Bad Girls when the idea for Waterloo Road came up. Bad Girls creators Maureen Chadwick and Ann McManus had a fiery belief in social justice and did rigorous research. Those are often the foundations of successful serial drama. Ann had once taught in a Glasgow comprehensive and was passionate about education: she believed we write off young people too readily
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I was bestowed with a nickname throughout my younger years: Smellanor. When I decided to go by Elle, the nickname evolved with it: Smell. I’m always a sucker for a fun rhyme. But it did make me hypervigilant about maintaining what I actually smelled like, vowing that this moniker would never manifest itself into reality. Thus began my ongoing journey into the wild world of fragrances
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