By Boluwatife Oshadiya | March 24, 2026
Key Points
- UK 10-year gilt yields rise above 5% for first time in years
- Over £100 billion wiped off bond market value in weeks
- Energy-driven inflation fears push borrowing costs higher
Main Story
UK government bond markets are under severe pressure, with 10-year gilt yields surging above 5% amid escalating energy prices linked to the Middle East crisis.
The sharp rise in yields marks the highest level since the fallout from the 2022 financial turmoil that led to the resignation of former Prime Minister Liz Truss. A benchmark index tracking conventional gilts has declined nearly 5% this month alone, reflecting intensified investor sell-offs.
The surge has erased more than £100 billion from the value of UK government bonds, as markets rapidly reprice inflation risks driven by rising oil and gas prices. The UK’s heavy reliance on imported energy has amplified its exposure to global price shocks.
Prime Minister Keir Starmer has convened an emergency COBRA meeting with key economic officials, including Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey, to address the growing crisis.
What’s Being Said
“What we are witnessing is the early stage of a dangerous chain reaction,” said Nigel Green, CEO of deVere Group.
“A spike in oil and gas prices is feeding directly into inflation expectations, and bond markets are responding fast,” he added.
What’s Next
- Emergency government response measures expected following COBRA meeting
- Markets to monitor Bank of England policy stance amid inflation risks
- Energy price trajectory likely to determine bond market direction
The Bottom Line: The surge in UK gilt yields signals a broader financial tightening cycle driven by external shocks, with rising borrowing costs set to impact households, businesses, and government finances alike.
