UK borrowing costs drop to lowest level in more than a year

Greater scope for interest rate cuts and reduced fears about government finances prompt bond yields to fall

UK borrowing costs have dropped to their lowest level in more than a year, as investors were encouraged by more stable government finances and the prospect of further interest rate cuts.

The yield, or interest rate, on 10-year UK government bonds fell to 4.34%, down from 4.41%, to the lowest level since December 2024, with the prospect of the UK public finances being put on a firmer footing lowering the risk of holding UK debt.