Government borrowing costs jump on report Reeves to drop income tax rise

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Reuters Rachel Reeves is wearing a dark maroon jacket and white shirt, standing in front of a wood-panelled wall and a large Union Jack flag. Reuters

UK government borrowing costs have risen in reaction to reports the chancellor will not increase income tax in the upcoming Budget.

The interest rate on 10-year government bonds, known as the yield, jumped to 5.56% from 5.44%, indicating the cost to government if it chose to borrow over this length of time.

Yields on 20- and 30-year gilts also rose by a similar amount in early trading.

Governments borrow money from investors by selling bonds - known as gilts – which is a loan the government promises to pay back at the end of an agreed time.

There had been widespread reporting that Rachel Reeves would increase income tax rates in the 26 November budget, but the Financial Times reported that plan has now been abandoned.

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