Britain sold £4.5 billion of five-year debt on Tuesday 27 October 2026, paying an average yield of 5.036% — the highest for a sale of that maturity since 2008. The sale, reported by Reuters, shows the bond-market pressure facing Chancellor John Healey before his first annual Budget on Wednesday. Investors bid for 3.51 times the volume on offer of the 4.625% March 2032 gilt, which the UK Debt Management Office described as typical of strong demand for British government bonds this year.

Why yields have surged

Bond yields have surged across advanced economies since the start of the US-Iran war, as investors fear higher inflation and debt issuance following the jump in energy prices. Earlier this month, 20- and 30-year gilt yields hit their highest since 1998, while five- and 10-year yields reached their highest since 2008.

What dealers expect after the Budget

Gilt dealers polled by Reuters last week expected only a modest increase in debt issuance this financial year after the Budget, pencilling in a median £3.4 billion rise in gilt sales and a £5 billion increase in net sales of Treasury bills. But they see a chunkier £27 billion rise in the gross financing requirement for 2027/28, compared with the last official forecast in March, to £334 billion. They also expect long-dated gilt issuance this year to fall to its lowest since 1990/91 as the Debt Management Office targets cheaper shorter-dated financing. In March, before most of the rise in yields, the Office for Budget Responsibility predicted Britain would spend 3.8% of national income servicing public debt by the end of the decade, nearly twice as much as in the 2010s.

Source: Reuters, 27 October 2026.