Britain Pays Highest Bond Yield Since 1999 Amid Inflation Fears

The British government paid its highest Treasury bond yield since 1999 at an auction of 10-year debt on Tuesday, as investors demanded greater compensation for persistent inflation.

Investors sought additional returns to offset the risk that continued price increases would erode the value of their bond payments.

Expectations of higher government spending in the budget due to be announced next month also weighed on demand, adding to the premium investors required to lend to the government.

The auction highlights the pressure on Britain’s public finances ahead of the budget. Higher borrowing costs make it more expensive for the government to raise funds, complicating decisions over spending.