Why are UK debt costs still so high

The yields on UK government bonds, commonly known as ‘gilts’, are now consistently the highest among the G7 group of advanced economies. Why is this, and why should the rest of us worry? Yesterday’s No.10 reshuffle has done little to help but there’s a lot more going on.

The numbers alone are disturbing. The cost of new government borrowing for ten years is now around 4.7 per cent in the UK, compared to 4.2 per cent in the US, around 3.5 per cent in France, Italy and Canada, 2.7 per cent in Germany, and just 1.6 per cent in Japan.

This is all the more remarkable because UK public debt is not particularly high by international standards. In fact, the ratio of debt to national income in the UK, at around 100 per cent, is far lower than in Italy, at 135 per cent, or Japan, at 240 per cent.