After hitting the highest level this century on Tuesday, the cost of long term UK government borrowing has now hit a fresh 27-year high.

The interest rate demanded by investors on the state’s long-dated borrowing (30-year bonds) rose to just below 5.75%, surpassing the 5.72% peak reached on Tuesday, pushing it to a high not seen since May 1998.

It comes as the government auctioned off these long-term loans on Tuesday and was forced to pay a premium to do so.

Issuing bonds is a routine way states raise money.

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As well as meaning the state has to pay more to borrow money, high interest rates on debt can signify reduced investor confidence in the ability of the UK to pay back these loans.

As the trading session continued, the interest rates on long-term government bonds, known as gilt yields, fell back to just above 5.66%, not enough to erase two days of rises.

The benchmark for state borrowing costs, the interest rate on 10-year bonds, also saw rises. The yield rose above 4.8% for the first time since January, before slightly falling back

The spiked borrowing cost also continued to cause a weakening in the pound.

After an initial fall to a month-long low against the dollar, one pound again buys $1.34.

It means sterling goes less far in dollars than before the latest peak in interest rates on government bonds. On Monday, sterling could buy $1.35.

Sterling dropped to equal €1.14 before easing up to €1.15. Just a few months earlier, a pound could buy €1.19 before Donald Trump’s April country-specific tariff announcements.

So why has this happened?

Government borrowing costs have been rising across the world amid a sell-off in bonds – which prompts investors to look for a higher return to hold them.

High inflation and national debts have increased concern about whether states can pay back the money.

Japan’s long-term borrowing cost hit a record high, while the yield on the US’s benchmark 10-year bond hit the 5% mark for the first time since July.

UK bond yields tend to follow the US.

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Key to easing UK borrowing costs was the announcement of the date of the budget on Wednesday morning.

UK public finances had been a worry for markets as Chancellor Rachel Reeves struggles to stick to her fiscal rules to bring down the debt and balance the budget.

Disquiet around comparatively low growth in the UK economy also played a role.

The American investors who have agreed to become the new owners of The Daily Telegraph have edged closer to gaining control of the newspaper by formally notifying the government of the deal.

Sky News understands that lawyers acting for RedBird Capital Partners, which will own a majority stake in the publisher if the deal is approved, submitted their detailed proposals to the Department for Culture, Media and Sport (DCMS) in the last few days.

The filing means that Lisa Nandy, the culture secretary, must decide whether to issue a new Public Interest Intervention Notice (PIIN) which would trigger further investigations into the takeover.

The notification by RedBird Capital’s lawyers should pave the way for the lifting of an interim enforcement order (IEO) imposed by Lucy Frazer, the then Conservative culture secretary, in December 2023, which prevented the acquirers from exerting any control over the Telegraph.

Insiders believe that the removal of the IEO will result in the DCMS issuing a new PIIN, which would prompt investigations by Ofcom and the Competition and Markets Authority into the £500m takeover.

A previous PIIN was issued in January 2024 when RedBird intended to buy the Telegraph titles in conjunction with Abu Dhabi state-controlled investor IMI.

Following a fraught legislative battle, IMI is now restricted to owning a maximum 15% stake in the newspapers – which it intends to acquire as part of the RedBird-led consortium.

Sky News has already revealed that Sir Leonard Blavatnik, owner of the DAZN sports streaming platform, and Daily Mail proprietor Lord Rothermere are preparing to buy minority stakes as part of the RedBird-led transaction.

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RedBird said in May that it was “in discussions with select UK-based minority investors with print media expertise and strong commitment to upholding the editorial values of the Telegraph”.

The Telegraph’s ownership has been in a state of limbo for nearly two-and-a-half years after its parent company was forced into insolvency by Lloyds Banking Group, which ran out of patience with the Barclay family, the newspaper’s long-standing owner.

RedBird IMI, a joint venture between the two firms, paid £600m in 2023 to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.

The Spectator was sold last year for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Lord Gove, the former cabinet minister, as its editor.

In July, the House of Lords approved legislation that will allow IMI, which is controlled by Sheikh Mansour bin Zayed Al Nahyan, the vice-president of the United Arab Emirates and ultimate owner of Manchester City Football Club, to hold a minority stake.

Other bidders had tried to gatecrash the Telegraph deal, with the field of rival contenders led by Dovid Efune, the owner of The New York Sun.

His key backer – the hedge fund founder Jeremy Hosking – recently told Sky News their bid was “ready to go” if the RedBird-led transaction fell apart.

Announcing its agreement to acquire the Telegraph titles in May, Gerry Cardinale, founder of RedBird Capital, said it marked the “start of a new era” for two of Britain’s most prominent newspapers.

Mr Cardinale said after the Lords vote: “With legislation now in place, we will move quickly and in the forthcoming days work with DCMS to progress to completion and implement new ownership for The Telegraph.”

Senior Telegraph executives and journalists are said to be frustrated at the pace of the process.

None of the parties involved in the Telegraph ownership situation would comment, while the DCMS declined to comment.

More than a thousand high street jobs will be put at risk this week when Bodycare, the health and beauty retailer, is forced to call in administrators.

Sky News has learnt that Bodycare, which was founded on a Lancashire market stall more than half a century ago, is expected to appoint administrators from Interpath Advisory as soon as Friday.

Bodycare, which specialises in selling fragrances, toiletries, cosmetics and skincare products, employs about 1,500 people and trades from nearly 150 stores across the country.

The chain’s collapse into insolvency proceedings is likely to trigger a further effort by Interpath to find a buyer for parts of the business.

The company is owned by Baaj Capital, a family office run by Jas Singh.

Baaj, which is considered a likely candidate to buy Bodycare back from the administrators, counts In The Style among its other investments.

The firm also attempted to take over The Original Factory Shop earlier this year before its offer was trumped by Modella Capital, another specialist retail investor.

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Bodycare’s deepening crisis comes just weeks after the retailer secured a £7m debt facility to buy it short-term breathing space.

The facility was secured against Bodycare’s retail inventory, according to a statement in July.

Bodycare was established by Graham and Margaret Blackledge in Skelmersdale in 1970, and sells branded products made by the likes of L’Oreal, Nivea and Elizabeth Arden.

The chain was profitable before the pandemic, but like many retailers, lost millions of pounds in the financial years immediately after it hit.

Bodycare received financial support from the taxpayer in the form of a multimillion-pound loan issued under one of the Treasury’s pandemic funding schemes.

The chain is run by retail veteran Tony Brown, who held senior roles at BHS and Beales, the now-defunct department store groups.

Bodycare is the latest high street chain to face collapse this year, amid intensifying complaints from the industry about tax increases announced in last autumn’s Budget.

In recent weeks, River Island and Poundland both narrowly avoided administration after winning creditor approval for restructuring plans involving store closures and job losses.

Baaj has been contacted for comment, while Interpath declined to comment.