UK borrowing costs increase and the pound falls in the ongoing leadership drama50 minutes agoRachel ClunBusiness ReporterEPAMarket concerns about a Burnham led government increasing borrowing fueled the rise of the 10-year bond yield, which is the interest rate charged by the UK government on a 10-year loan. It rose to 5.11% from 4.99% when trading began. The pound fell 0.3% against the dollar to $1.3371, having fallen sharply late on Thursday after Burnham’s announcement.Kathleen Brooks, research director at XTB, said the falls meant the pound was 1.5% lower this week. The yield on 30-year gilts rose to 5.779%. Borrowing costs for all governments rose on Friday as concerns persist over how the Iran War could push up inflation because of the surge in energy prices. Burnham’s New Statesman comment, Russ Mould, said that while there is no guarantee he will win a seat in Parliament or run for the leadership, it has “helped to push UK borrowing rates higher and seen the pound crash”. Burnham’s involvement in the process would also be longer and more noisy, which would prolong and increase the uncertainty surrounding the political situation in Britain, said Russ Mould. “Overall, UK Politics is a mess. There are already signs that the gilt market is being abandoned by foreign buyers.” She said that if there is a major rout of the pound or gilts in the next few days, potential candidates may have to consider whether it was a good time to take on the PM. “UK stocks fell on Friday with the FTSE 100 index falling 0.6%.Burnham confirmed he will run for a seat as mayor of Greater Manchester after MP Josh Simons announced he would step down to make room for the leadership candidate. Burnham’s bid for the top job is not a done deal. He would have to be selected by the local party as a candidate in the constituency Makerfield and then win the by-election, which could be a close race with Reform UK.
