UK Pays 5.036% on Five-Year Gilt, Highest Since 2008, Ahead of Healey's First Budget

Britain borrowed £4.5bn at a 5.036% interest rate on a five-year gilt, the highest since 2008, on the eve of Chancellor John Healey's maiden Budget. A comparable auction a year ago priced at just 4%, underscoring the sharp rise in UK borrowing costs. A 10-year gilt sold last week yielded more than 5.4%, while 30-year bonds trade above 5.7%. Economists warn Healey risks a repeat of the 2022 Truss mini-Budget crisis if spending plans unsettle markets; he has pledged "fiscal discipline" and told Cabinet colleagues to tighten departmental finances amid inflation, pay pressures and doctors' strikes. Markets expect a low-key Budget, with the Treasury shifting toward short-term borrowing. Citi forecasts an £11bn increase in the borrowing target this year, over half via Treasury bills, warning the shift "stores up problems for later." Standard Life's Anthony O'Brien said using every available capital pool "makes sense" but carries greater refinancing and rate risk. The OBR issues new projections Wednesday.