UK long-term borrowing costs could halve chancellor’s budget headroom

Yield on 30-year gilts highest since 1998 as rout triggered by global factors underlines tricky backdrop John Healey faces

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The chancellor’s headroom against Labour’s fiscal rules could be almost halved at his first budget if the current global bond sell-off persists into the autumn, economists say.

The UK’s long-term borrowing costs jumped to their highest level since early 1998 on Tuesday as investors dumped government bonds, betting on higher inflation.