Daily Market View 20-03-2026
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UK borrowing surged in February- before crisis even dawned
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The UK government paid the highest level of interest on its debt in the Treasury's history, mostly owing to movements in the Retail Price Index that impacts the way certain bonds are paid out. Still, it's certainly alarming considering that all of this come ahead of the massive spike in Gilt yields that will push interest payments even higher as the BoE is anticipated to raise rates this year.
Indeed, following the Bank of England's hold in rates yesterday and accompanying hawkish statement regarding future rates should the conflict in Iran and spike in energy prices linger longer than a few months.
In fact, the Friday before the conflict began on the Saturday, the market had priced in two full interest rate cuts from the BoE this year, they now price in the best part of three hikes.
This would put a very serious amount of pressure on public finances, that are already buckling under the weight of higher interest payments. It could be the start of a very difficult time.
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