Falling bonds demand could push borrowing costs higher
Falling demand for UK gilts, also called bonds, might push borrowing costs higher, the OBR has warned.
They say with defined benefit pension schemes not buying as many, there might be a £20bn hit to borrowing costs over the long term.
“You’ve got to find people and induce them to hold bonds,” David Miles of the OBR said. “That means you’ve got to offer them a better deal.”
Falling demand means prices may lower; when bond prices go down, the yield on them therefore rises, and the yield is the effective cost of borrowing for the government.
Karl Matchett15 July 2025 14:22
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