UK borrowing costs jump again on fears Iran conflict will curb growth

The Guardian - World NewsEN 3 min read 100% complete by Phillip InmanMarch 3, 2026 at 07:38 PM

AI Summary

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UK borrowing costs rose sharply due to investor fears that the Iran conflict will curb economic growth. Concerns center on rising oil and gas prices fueling inflation, potentially delaying anticipated interest rate cuts by the Bank of England. Brent crude oil prices have already increased significantly since December. Despite recent positive news regarding lower UK inflation and a reduced government spending deficit, anxieties over the Middle East crisis overshadowed any potential positive market reaction. Market expectations for an interest rate cut at the Bank of England's upcoming meeting have decreased substantially. Rising gilt yields reflect the bond market's anticipation of a prolonged conflict and an energy-price inflation shock.

Key Entities & Roles

Key Player Opposition Context

Capital Economics 40% XTB 40% Paul Dales 40% David Aikman 50% National Institute of Economic and Social Research 50% Kathleen Brooks 50% Middle East ×370% Rachel Reeves ×270% Bank of England ×270% Iran 80% United Kingdom ×790%

Keywords

borrowing costs 90% inflation 80% iran conflict 80% economic growth 70% interest rates 70% uk economy 60% energy prices 60% bank of england 50% government borrowing 50% bond yields 50%