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UK government borrowing costs have hit a 20-year high after the Bank of England confirmed its emergency bond-buying programme will end on Friday as planned.

On Wednesday morning, it said all temporary and targeted purchases of UK government bonds, known as gilts, would stop.

This has been the position throughout and has been “made absolutely clear in contact with the banks at senior levels”, the Bank said in a statement.

However, the clarification of its position did little to soothe investor nerves, with a sell-off taking 20 and 30-year gilt yields – the rate demanded to hold government debt – to their highest level since 2002.

Both exceeded 5.1% earlier on Wednesday.

The emergency 13-day bond buying programme was started to avoid “dysfunction” in the pension market which took hold amid bond market unease over UK borrowing requirements following the government’s mini-budget.

The programme is aimed at tackling the consequences of rising interest rates on government bonds, which increased the cost of holding the bonds and resulted in pension funds facing a liquidity crunch.

There had earlier been suggestions that the Bank could backtrack, however, and extend the bond-buying beyond Friday’s cut-off.

The Financial Times said the Bank had been privately telling those working in pension funds that it could be extended.

This came despite the governor, Andrew Bailey, firmly stating pension funds had “three days left… to get this done” at an event in Washington on Tuesday evening.

In its statement on Wednesday, the Bank reaffirmed it would continue to support the pension markets in other ways beyond Friday.

This would be done via the Bank’s temporary yet open-ended measure to help lenders facing liquidity issues who work with the corner of the pensions market that had experienced difficulties. The measure was announced on Monday.

The Financial Times report said those involved in derivatives needed more time to avoid the forced selling that led to the Bank’s intervention on 28 September.

Read more:
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What are bonds and where do they fit in the mini-budget crisis?

It was revealed later in the day that the Bank accepted £1.9bn worth of offers in its daily index-linked bond buy-back operation.

It also accepted all £2.3754bn of long-dated conventional gilts which it was offered – the highest sum since the scheme began on 28 September but well below the £5bn it would have been prepared to buy.

The pound clawed back some of the losses versus the dollar incurred on Tuesday after Mr Bailey’s refusal to extend the bond-buying support beyond Friday, trading just shy of $1.11.

30-year bond yields were hovering just below their level before the Bank’s first intervention – at 4.9% – after striking the 20-year high earlier in the day.

The thinking behind the emergency bond-buying has been questioned by the Treasury Committee of MPs.

The chair of the Treasury Committee, Mel Stride, wrote to the deputy governor at the Bank on Wednesday and asked for an update on the emergency interventions, querying what further action will be required by the Bank to prevent risks to financial stability.

Mr Stride also asked how the Bank decided to expand its emergency intervention on Monday, to launch new liquidity support to lenders and start buying index linked gilts (with interest rates in line with inflation). He questioned why these interventions were not part of the original intervention announced on 28 September.

What is the Bank of England’s bond-buying programme?

The Bank signalled it is ready to increase interest rates again in November as it fights to bring inflation down to 2%. Most recent figures show inflation was at 9.9%.

Once again the Bank’s chief economist, Huw Pill, said interest rates likely need to rise.

“At present, I am still inclined to believe that a significant monetary policy response will be required to the significant macro and market news of the past few weeks.”

The Bank’s monthly financial policy summary was released on Wednesday and warned UK households will become more vulnerable to financial shocks.

“Rises in the cost of living and interest rates will increase pressure on UK household finances and make households more vulnerable to shocks,” the Bank’s Financial Policy Summary and Record said.

Further warnings on the economic health of businesses were issued: “For businesses, higher costs, lower household demand and rising interest rates will reduce earnings. Some may find it harder to repay debts.”

Households may be less impacted by rising interest rates due to being on fixed-term repayment plans and having less debt, the Bank said. Accordingly there is a reduced risk of defaulting on repayments.

“People have less debt (relative to their incomes) and the share of high loan-to-value mortgages is much lower than before the global financial crisis. This reduces the risk of them defaulting on debt and banks are now required to be flexible in their response,” the report said.

The banks are in a better position than the financial crash too and are able to help households should they fall into financial difficulty, the Bank concluded.

“The UK banking sector is substantially more resilient than before the global financial crisis, with significantly higher levels of capital and liquidity. They can continue to support households and businesses even if economic conditions get worse.”

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‘At least 798 killed’ at Gaza aid points – as medical charity warns acute malnutrition at all-time high

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'At least 798 killed' at Gaza aid points - as medical charity warns acute malnutrition at all-time high

At least 798 people in Gaza have reportedly been killed while receiving aid in the past six weeks – while acute malnutrition is said to have reached an all-time high.

The UN human rights office said 615 of the deaths – between 27 May and 7 July – were “in the vicinity” of sites run by the controversial US and Israel-backed Gaza Humanitarian Foundation (GHF).

A further 183 people killed were “presumably on the route of aid convoys,” said Ravina Shamdasani, from the Office of the UN High Commissioner for Human Rights.

Its figures are based on a range of sources, including hospitals, cemeteries, and families in the Gaza Strip, as well as non-governmental organisations (NGOs), its partners on the ground, and Hamas-run health authorities.

Aid agency Project Hope said on Thursday that 10 children were among at least 15 people killed as they waited for its clinic in Deir al Balah to open.

Omar Meshmesh carries the body of his three-year-old niece Aya - one of the victims of the clinic attack. Pic: AP
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Ten children were reportedly killed when Israel attacked near a clinic on Thursday. Pic: AP

The GHF has claimed the UN figures are “false and misleading” and has repeatedly denied any violence at or around its sites.

Meanwhile, Medecins Sans Frontieres (MSF) – also known as Doctors Without Borders – said two of its sites were seeing their worst-ever levels of severe malnutrition.

Cases at its Gaza City clinic are said to have tripled from 293 in May to 983 in early July.

“Over 700 pregnant or breastfeeding women and nearly 500 children are now receiving emergency nutritional care,” MSF said.

The humanitarian medical charity said food prices were at extreme levels, with sugar at $766 (£567) per kilo and flour $30 (£22) per kilo, and many families surviving on one meal of rice or lentils a day.

It’s a major concern for the estimated 55,000 pregnant women in Gaza, who risk miscarriage, stillbirth and malnourished infants because of the shortages.

The GHF began distributing food packages in Gaza at the end of May, after Israel eased its 11-week blockade of aid into the coastal territory.

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US aid contractors claim live ammo fired at Palestinians

It has four distribution centres, three of which are in the southern Gaza Strip.

The sites, kept off-limits to independent media, are guarded by private security contractors and located in zones where the Israeli military operates.

Palestinian witnesses say Israeli forces have repeatedly opened fire towards crowds of people going to receive aid.

The Israeli military says it has fired warning shots at people who have behaved in what it says is a suspicious manner.

It says its forces operate near the aid sites to stop supplies from falling into the hands of militants.

Read more:
GHF aid distribution linked to increased deaths
Gaza situation ‘apocalyptic’, says UN expert

After the deaths of hundreds of Palestinians trying to reach the aid hubs, the United Nations has called the GHF’s aid model “inherently unsafe” and a violation of humanitarian impartiality standards.

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In response, a GHF spokesperson said: “The fact is the most deadly attacks on aid sites have been linked to UN convoys.”

The GHF says it has delivered more than 70 million meals to Gazans in five weeks and claims other humanitarian groups had “nearly all of their aid looted” by Hamas or criminal gangs.

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At least 798 people have been killed at Gaza aid points, the UN says

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'At least 798 killed' at Gaza aid points - as medical charity warns acute malnutrition at all-time high

At least 798 people in Gaza have been killed while receiving aid in six weeks, the UN human rights office has said.

A spokesperson for the Office of the United Nations High Commissioner for Human Rights said 615 of the killings were “in the vicinity” of sites run by the controversial US and Israel-backed Gaza Humanitarian Foundation (GHF).

A further 183 people killed were “presumably on the route of aid convoys,” Ravina Shamdasani told reporters in Geneva.

The office said its figures are based on numbers from a range of sources, including hospitals, cemeteries and families in the Gaza Strip, as well as NGOs, its partners on the ground and the Hamas-run health authorities.

The GHF has claimed the figures are “false and misleading”. It has repeatedly denied there has been any violence at or around its sites.

The organisation began distributing food packages in Gaza at the end of May, after Israel eased its 11-week blockade of aid into the enclave.

It has four distribution centres, three of which are in the southern Gaza Strip. The sites, kept off-limits to independent media, are guarded by private security contractors and located in zones where the Israeli military operates.

Palestinian witnesses say Israeli forces have repeatedly opened fire towards crowds of people going to receive aid.

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US aid contractors claim live ammo fired at Palestinians

The Israeli military says it has fired warning shots at people who have behaved in what they say is a suspicious manner.

It says its forces operate near the aid sites to stop supplies falling into the hands of militants.

Read more:
GHF aid distribution linked to increased deaths
Gaza situation ‘apocalyptic’, says UN expert

After the deaths of hundreds of Palestinians trying to reach the aid hubs, the United Nations has called the GHF’s aid model “inherently unsafe” and a violation of humanitarian impartiality standards.

Follow The World
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Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

In response, a GHF spokesperson told the Reuters news agency: “The fact is the most deadly attacks on aid sites have been linked to UN convoys.”

The GHF says it has delivered more than 70 million meals to Gazans in five weeks and claims other humanitarian groups had “nearly all of their aid looted” by Hamas or criminal gangs.

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Ten children among at least 15 killed waiting for Gaza health clinic to open, says aid group

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Ten children among at least 15 killed waiting for Gaza health clinic to open, says aid group

Ten children and two women are among at least 15 killed in an airstrike near a Gaza health clinic, according to an aid organisation.

Project Hope said it happened this morning near Altayara Junction, in Deir al Balah, as patients waited for the clinic to open.

The organisation’s president called it a “blatant violation of international humanitarian law, and a stark reminder that no one and no place is safe in Gaza“.

“No child waiting for food and medicine should face the risk of being bombed,” added the group’s project manager, Dr Mithqal Abutaha.

“It was a horrific scene. People had to come seeking health and support, instead they faced death.”

Operations at the clinic – which provides a range of health and maternity services – have been suspended.

Some of the children were reportedly waiting to receive nutritional supplements, necessary due to the dire shortage of food being allowed into Gaza.

More on Gaza

Israel‘s military is investigating and said it was targeting a militant who took part in the 7 October terror attack.

“The IDF [Israel Defence Force] regrets any harm to uninvolved individuals and operates to minimize harm as much as possible,” added.

The deaths come as an agreement over a 60-day truce hangs in the balance – with President Trump cautiously saying it could happen “this week, or next week”.

Elsewhere in Gaza, the Nasser Hospital reported another 21 deaths in airstrikes in Khan Younis and in the nearby coastal area of Muwasi.

It said three children and their mother were among the dead.

Israel said its troops have been dismantling more than 130 Hamas infrastructure sites in Khan Younis over the past week, including missile launch sites, weapons storage facilities and a 500m tunnel.

On Wednesday, a soldier was shot dead when militants burst out of a tunnel and tried to abduct him, the military added.

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Eighteen soldiers have been killed in the past three weeks – one of the deadliest periods for the Israeli army in months.

A 22-year-old Israeli man was also killed on Thursday by two attackers in a supermarket in the Israeli-occupied West Bank, said the Magen David Adom emergency service.

People on site reportedly shot and killed the attackers but information on their identity has so far not been released.

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What is the possible Gaza hostage and ceasefire deal ?

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Lack of food and water ‘lethal’ for Gaza children

Negotiations over a proposed 60-day ceasefire are ongoing and President Trump reportedly put “heavy” pressure on Israel’s leader, who visited the US this week.

A major sticking point is said to be the status of the Israel Defence Forces (IDF) inside Gaza during the 60-day ceasefire and beyond, should it last longer.

However, Sky News understands the Israeli government thinks the chances of a permanent truce are “questionable”.

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Listen to The World with Richard Engel and Yalda Hakim every Wednesday

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More than 57,000 Palestinians have been killed in the war – more than half are women and children, according to Gaza’s Hamas-controlled health ministry.

Its figure does not differentiate between civilians and fighters.

The war began in October 2023 after Hamas killed around 1,200 people in Israel and kidnapped 251 others.

Some of them remain In Gaza and are a crucial part of ceasefire negotiations, which also include a planned surge in humanitarian aid into the strip.

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