UK Borrowing Costs Surge Amid Iran War, Energy Crisis

0:00On March 27, UK government borrowing costs have climbed above 5 percent as a global bond market sell-off intensifies, driven by the ongoing Iran. War. Borrowing costs jump for the U.S. and Eurozone governments, too, while markets worldwide drop sharply on Friday, with Brent crude holding steady, above $110 a barrel. Experts note growing investor panic this week, with little confidence that recent diplomatic moves will end the conflict soon, and traders now betting, on up to three Bank of England interest rate hikes in 2026. The UK faces steeper economic risks than peers, due to its trade reliance and sensitivity to energy prices, piling pressure on Chancellor Rachel Reeves, amid the ongoing cost of living squeeze. The Bank of England, still rebuilding credibility after underestimating inflation surges, post-pandemic, and Ukraine invasion, may need to act more. Only now to keep price rises and check, even as growth slows in jobs weaken.