The UK government paid the highest interest rate on a 30-year bond since the Debt Management Office was established in 1998, as global bond market turmoil pushed up the cost of British borrowing. On Tuesday the Treasury paid 5.82% to borrow £4bn, a stark signal of the fiscal pressure facing chancellor John Healey, who used a speech in Coventry to insist he remains committed to balancing the books despite the deteriorating backdrop.

Markets have been rattled by fears of renewed inflation after the resumption of Middle East conflict pushed Brent crude to around $97 a barrel, alongside investor concern over rising public debt. Analysts expect the Office for Budget Responsibility's forecast ahead of the 28 October budget to wipe out at least half of the £24bn fiscal headroom built up by Healey's predecessor, Rachel Reeves. Separately, Bank of England governor Andrew Bailey told MPs that inflation risks were "on the upside" due to energy prices, though he denied any secret plan to raise interest rates, noting UK mortgage rates had already risen roughly 0.75 percentage points since the conflict began—the largest such increase in the G7 bar Japan. The Bank's monetary policy committee, whose members expressed differing views on inflation risks, meets next week to decide on rates.