UK government borrowing costs reached their highest level in nearly two decades on Wednesday, despite Chancellor John Healey’s efforts to reassure investors during his speech at the Labour Party conference. Yields on UK government bonds, known as gilts, climbed amid a broader sell-off in global bond markets.

The yield on ten-year gilts surpassed 5.44%, marking the highest level since 2007 and exceeding previous peaks from earlier this month. Thirty-year gilt yields also surged past 5.93%, approaching 28-year highs recorded recently. Rising yields indicate falling bond prices, reflecting increased borrowing costs for the government.

Healey sought to calm markets by reaffirming the government’s commitment to existing fiscal rules, emphasizing cooperation with Prime Minister Andy Burnham on plans to address the country’s rising benefits bill and escalating national debt. The Chancellor described current debt levels as “an assault on our common sense” and expressed determination to manage fiscal discipline amid growing spending pressures.

Despite these assurances, financial analysts noted that Healey’s speech was heavy on rhetoric but offered few concrete measures to stem the upward trajectory of borrowing costs. Chris Beauchamp, chief market analyst at trading platform IG, remarked that the speech was unlikely to reverse the trend of rising gilt yields.

The increase in UK borrowing costs occurred against the backdrop of a global bond market downturn. Ten-year U.S. Treasury yields, a key benchmark for global financing, also hit a 19-year high on Wednesday, contributing to widespread investor jitters. European government bonds—including those of Germany, France, and Italy—were similarly impacted amid geopolitical tensions.

Markets remain unsettled partly due to President Donald Trump’s rejection of a proposed agreement to reopen the Strait of Hormuz, a strategic shipping route. This development pushed oil prices close to $109 per barrel, intensifying economic uncertainty.

In the UK, concerns persist about Labour’s fiscal strategy as it seeks to manage spending commitments without reducing expenditure. Investors are closely watching how the party will balance fiscal responsibility with social spending demands, particularly as gilt yields have steadily risen since Burnham assumed office. Prior to his tenure, ten-year gilt yields had remained just below 5%, underscoring the recent shift in market sentiment.

The combination of domestic fiscal challenges and global economic pressures has contributed to the marked increase in the UK’s borrowing costs, adding urgency to plans for managing public finances.