Britain Now Pays More to Borrow Than Italy Did During Eurozone Debt Crisis as 30 Year Gilt Yield Hits 6 Percent

Here is an unwelcome statistic for the Chancellor about the cost of long-term government borrowing in Britain.

The yield on 30-year gilts reached as high as 6.02 per cent on Thursday, which is the first time a G7 nation has been forced to pay interest rates above 6 per cent on its debt since Italy in 2012.

That was at the height of the eurozone debt crisis. Today Italy’s 30-year bond yield sits at 4.66 per cent.

Britain is now paying more to borrow than Italy.

According to The Times, the yield on the 30-year UK government bond rose to 6.028 per cent, the highest since 1998. The benchmark 10-year yield rose to a near 20-year high of 5.51 per cent as investors globally sold long-dated government bonds.

Morningstar reports ten-year gilt yields hit 5.510 per cent, their highest level since 2007, while 30-year gilt yields accelerated to 6.029 per cent, the highest since 1998.

The Clacton Gazette reports UK gilt yields hit 6 per cent for the first time in nearly 30 years, heaping pressure on the Chancellor ahead of his inaugural Budget later this month.

It intensifies the challenge facing Chancellor John Healey as he looks to set out his first Budget at a time of pressure on Britain’s creaking public finances and rising debt.

For context, Italy’s 30-year bond yield climbed to 4.661 per cent on the same day – more than 1.3 per cent lower than Britain. Even Spain’s 30-year briefly touched 4.29 per cent, the highest since November 2023, and Germany’s rose to 3.41 per cent, a 14-year high. Britain led the retreat.

The numbers are staggering.

Net debt interest for 2026/27 is estimated at 109 billion pounds, according to TradingView. The US national debt crossed 40 trillion dollars in 2026, with annual interest payments surpassing 1 trillion dollars for the first time. The yield on 30-year US Treasury bonds reached 5.33 per cent, the highest since 2007. The UK is in a similarly uncomfortable position.

Why is this happening?

A global bond sell-off gathered pace as higher energy costs fuelled inflation concerns and expectations that the AI boom could support economic growth strengthened the case for higher-for-longer interest rates. Yields move inversely to prices – when yields rise, bond prices fall.

But Britain is being hit hardest because of Andy Burnham’s spending plans.

At Labour conference in Liverpool, Burnham unveiled more than 200 billion pounds of extra spending, including scrapping the triple lock, nationalising water and energy, and opening the door to rejoining the EU. Investors are now asking how Britain will pay for it.

Gilt yields move counter to the value of the bonds, meaning their prices fall when yields rise. When yields hit 6 per cent, it means the Government has to pay 6 per cent interest to borrow for 30 years – a rate not seen since Black Wednesday era borrowing.

In 2012, Italy at 6 per cent plus needed an emergency bailout from the European Central Bank and austerity that crushed growth for a decade. That is the echo Britain now faces.

How is this making Britain prosperous?

The Chancellor promised prosperity. Instead, Britain now has borrowing costs higher than Italy during the eurozone debt crisis, higher than at any time since 1998, and the highest 10-year borrowing costs since the financial crisis of 2007.

Every 0.1 per cent rise in gilt yields adds billions to debt interest. At 6 per cent, Britain is spending more on debt interest than on defence, more than on education, and almost as much as the entire NHS England budget just to stand still.

Latest: UK borrowing costs

• 30-year gilt yield hit 6.02 to 6.07 per cent on Thursday, highest since 1998
• First G7 nation to pay above 6 per cent since Italy in 2012 during eurozone crisis
• Italy 30-year today sits at 4.66 per cent, 1.3 per cent lower than UK
• 10-year gilt hit 5.51 per cent, highest since 2007
• Net debt interest estimated at 109 billion pounds for 2026/27
• Chancellor John Healey facing pressure ahead of first Budget later this month

Is this the price of Burnham’s 200 billion pound spending spree? Can Britain afford Labour’s plans? Have your say in the comments and share.

FAQ: UK gilt yields hit 6 per cent

Why have UK borrowing costs hit 6 per cent?
UK gilt yields hit 6 per cent for the first time since 1998 due to a global bond sell-off driven by higher energy costs, inflation concerns, and expectations of higher-for-longer interest rates, plus investor concern over Andy Burnham’s 200 billion pound spending plans announced in Liverpool.

How does UK compare to Italy?
Britain is now the first G7 nation to pay above 6 per cent on 30-year debt since Italy in 2012 at the height of the eurozone debt crisis. Today Italy pays 4.66 per cent on 30-year debt, significantly lower than the UK’s 6.02 per cent.

What does this mean for the Budget?
Higher gilt yields mean higher debt interest payments, estimated at 109 billion pounds for 2026/27. It leaves Chancellor John Healey with less room for spending and raises the prospect of higher taxes or spending cuts in the Budget later this month.