C1290 words1:54News Report American AccentPublished May 12, 2026 · Updated May 12, 2026

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UK Bond Yields Retreat from 28-Year Peak as Cabinet Ministers Rally Behind Starmer

UK borrowing costs surged to their highest level since 1998 on Wednesday morning, rattling financial markets and intensifying scrutiny of the government's fiscal policy.

Long-term bond yields climbed sharply before easing back later in the session, after several cabinet ministers publicly voiced their support for Prime Minister Keir Starmer.

The retreat in yields suggested that political reassurances had partially restored market confidence, though analysts cautioned that underlying vulnerabilities remained.

The turbulence in the bond market coincided with broader concerns about political stability in Westminster.

Jamie Dimon, chief executive of JP Morgan, indicated that the bank would reconsider its plans for a multi-billion-pound headquarters in Canary Wharf, should future governments adopt a hostile stance toward the financial sector.

Dimon emphasized that JP Morgan had already paid approximately ten billion dollars in additional taxes and argued that further levies would be neither fair nor justified.

On the equity front, Britain's blue-chip FTSE 100 index closed virtually unchanged, shedding a mere four points to settle at 10,265.

Banking stocks bore the brunt of the selling pressure, with Lloyds declining by 4.3 percent and Barclays falling 3.3 percent.

#10

The losses were driven by speculation that a left-leaning successor to Starmer might impose higher taxes on the financial sector, which would erode profitability across the industry.

#11

The spike in bond yields effectively means that the price of government debt has fallen, thereby offering investors a more attractive rate of return.

#12

Economic indicators now point to mounting pressure on the Treasury, as elevated borrowing costs could constrain public spending and complicate future budget planning.

#13

Were the government to lose the confidence of bond markets entirely, the fiscal consequences could prove severe and far-reaching.

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UK long-term borrowing costs dip from 28-year high after Starmer allies back PM – business live

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