Britain Pays Highest Bond Yield Since 1999 Amid Inflation Concerns

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

The higher borrowing cost reflected concern that inflation could continue to erode the value of returns from government debt. Investors sought an additional premium to account for that risk.

Attention also focused on the prospect of increased government spending in the budget due to be announced next month. Those expectations added to the concerns shaping demand at the auction.

The result highlights the pressure on Britain’s public finances ahead of the budget. Higher yields make new borrowing more expensive, complicating decisions over how to fund any additional spending.