07 May 2026Long-term borrowing costs have reached their highest level since 1998 as a result of the Iran war and ongoing uncertainty over local and national elections. Gilt yields rose by as much as 0.14 percentage points to 5.79%, representing their highest level in nearly three decades, before settling at 5.74%. Bond markets for major economies have witnessed declines since the start of the US-Israel conflict with Iran, which has driven the costs associated with borrowing higher. Andrew Bailey, Governor of the Bank of England, commented: 'If you look at day to day... what's moving the market - in this respect, it's all to do with the conflict… also because what gets said about the conflict. 'The [sterling] exchange rate doesn't move much at all. That's one thing I look at when I'm judging, is there a particular UK story here? Is the UK somehow different to other countries? It's trading actually around the upper end of the band it's been in since Brexit.'