Global bond markets sold off sharply, pushing UK government borrowing costs to their highest levels in decades as investors grow increasingly anxious about inflation, interest rates and mounting public debt. The rout is a worldwide phenomenon rather than a purely British problem, with yields also surging in the US, Germany and Japan, though analysts note UK gilts are climbing faster than most, intensifying pressure on the government ahead of the upcoming Budget.

Ten-year UK gilt yields rose to 5.268 per cent, their highest since June 2008, while 30-year yields held near Tuesday's 28-year high above 5.9 per cent. US ten-year Treasury yields climbed to almost 4.8 per cent amid uncertainty over new Federal Reserve chairman Kevin Warsh's hawkish stance, German ten-year yields hit their highest since 2011 after eurozone inflation topped 3 per cent, and Japanese ten-year yields breached 3 per cent for the first time in three decades. Oil prices also rose, with Brent crude above $94 a barrel amid US-Iran tensions. Economists including Peel Hunt's Kallum Pickering warned there is "no room for handouts" in the Budget, arguing the government must cut spending, raise taxes and deregulate or risk bond markets crowding out economic progress.