The cost of UK government borrowing has hit a high not seen in decades as Prime Minister Keir Starmer faces mounting threats to his leadership and the oil price rises.

The UK's benchmark borrowing cost rose to 5.12% on Tuesday morning - a near 20-year high.

Last time investors demanded such a return to lend to the state for 10 years was in July 2008.

Longer-term forms of borrowing also rose sharply.

The interest rate, also known as the yield, on 30-year loans to the state - called bonds - hit a level not seen since May 1998 at more than 5.8%.

For 20-year bonds, the rate demanded by investors spiked to 5.75%, a peak last seen in July 1998.

Investors appear more nervous about the ability of the UK to repay those debts amid uncertainty over the prime minister's stewardship of the UK economy.

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Other major economies have seen increases in their borrowing costs as oil prices have remained high due to supply disruptions due to the war with Iran.

Higher oil prices mean greater inflation, which can lead to central banks raising interest rates, which brings up borrowing costs.

Even before the latest bout of political peril for Starmer, the UK's benchmark borrowing cost had reached financial crisis-era highs, as the UK is particularly exposed to energy price shocks due to its reliance on oil and gas imports.

Why does it matter?

Having to pay more on debt can disrupt government spending plans.

If borrowing costs more, there may be less to spend on other projects or for tax cuts.

What else is going on in markets?

The value of the pound has also fallen, with one buying $1.352 - a low not seen since the end of April.

The UK's benchmark stock index - the FTSE 100 - has also dropped 0.5% this morning, reaching a point not hit since the end of March.

(c) Sky News 2026: UK borrowing costs hit decades-long high as pressure mounts on Starmer