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UK Borrowing Costs Surge to Highest Level Since Financial Crisis Amid Inflation Fears

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Britain’s benchmark borrowing costs have surged to their highest level since the financial crisis, as inflation concerns and investor uncertainty continue to weigh heavily on the economy.

The yield on the UK’s 10-year gilt, a key indicator of public borrowing costs, climbed to 4.82% on Wednesday, surpassing the peaks seen following former Prime Minister Liz Truss’s controversial mini-budget in 2022. Meanwhile, the yield on the 30-year gilt rose to a fresh 27-year high of 5.358% on Tuesday, marking a significant spike in bond yields as prices fall. Bond yields typically rise when investor demand drops, underscoring the ongoing sell-off in government debt.

The increase in yields has also put pressure on the British pound, which weakened by 1% against the dollar, slipping to $1.23. The pound has underperformed many of its global counterparts, signalling continued skepticism in the markets regarding the UK’s fiscal sustainability.

The rise in UK borrowing costs comes as the US dollar remains strong, bolstered by expectations of corporate tax cuts and regulatory changes under the new US administration. The dollar index has risen by nearly 7% over the past year, further exacerbating the strain on the pound.

Several factors have contributed to the UK’s vulnerability to rising gilt yields, including its reliance on energy imports, which has amplified commodity price shocks. In addition, investors are seeking higher returns in private debt markets, forcing the UK government to offer higher yields on its bonds. The government’s increased borrowing in its October budget, combined with the Bank of England’s gradual interest rate cuts, has also weighed on bond prices.

Simon French, chief economist at Panmure Liberum, pointed out that the UK’s long bond yields have become increasingly detached from their US counterparts since the market turmoil following the 2022 mini-budget.

The surge in borrowing costs has significant implications for the UK government’s finances, increasing debt servicing costs and reducing the chancellor’s room for spending. Capital Economics estimates that £8.9 billion of the £9.9 billion fiscal buffer set aside by Chancellor Rachel Reeves has already been depleted. As a result, further tax hikes or public spending cuts are likely.

With rising borrowing costs, the government faces a tough decision: reduce spending or raise taxes. Although Chancellor Reeves has promised no tax increases at her spring statement in March, continued high borrowing costs may force her to reconsider, particularly if the gilt yields remain elevated.

The UK’s bond market has underperformed globally, mirroring concerns in the US and other European markets. With ongoing inflationary pressures, analysts warn that Britain’s fiscal outlook remains uncertain, and political and financial challenges may persist in the months ahead.

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Amazon MGM Takes Creative Reins of James Bond Franchise Amid Casting Buzz

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In a landmark shift for the James Bond franchise, Amazon MGM has partnered with long-time producers Michael G. Wilson and Barbara Broccoli to oversee the future of 007. While all three entities retain co-ownership of the Bond intellectual property, Amazon MGM will now lead creative decisions, marking a significant departure from its previously limited role.

The move follows Amazon’s $8.5 billion acquisition of MGM in 2021, which granted it partial ownership but little say in the franchise’s artistic direction. With Daniel Craig’s departure after 2021’s No Time to Die, speculation about the next James Bond has intensified. Jeff Bezos, Amazon’s founder and executive chairman, fueled the debate by asking his followers on social media platform X, “Who’d you pick as the next Bond?” The overwhelming response highlighted British actor Henry Cavill as a fan favorite. Known for roles in Superman, The Witcher, and Mission: Impossible – Fallout, Cavill previously auditioned for the role in 2006’s Casino Royale but lost to Daniel Craig. Director Martin Campbell praised Cavill’s audition but deemed him too young at the time. Now in his early forties, Cavill’s age could be a factor if long-term commitments are considered.

Daniel Craig acknowledged Wilson and Broccoli’s contributions, telling Variety, “My respect, admiration, and love for Barbara and Michael remain constant and undiminished.” With Wilson stepping back and Broccoli expected to reduce her involvement, Amazon MGM gains greater creative control, raising questions about the franchise’s future direction.

Fan speculation continues to swirl around Cavill, alongside other contenders like Taron Egerton, Tom Hardy, and Idris Elba. While Amazon MGM has yet to announce a timeline or reveal casting decisions, industry watchers anticipate a new era that may extend beyond traditional films, potentially including spin-offs, series, and streaming exclusives. As the studio reshapes Bond’s future, audiences worldwide eagerly await the next chapter in the iconic spy saga.

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Global Hiring Slump Marks Longest Downturn in Decades, Says Hays CEO

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The global job market is experiencing its longest downturn in over 20 years, according to Dirk Hahn, CEO of Hays, Britain’s largest listed recruitment firm. Hahn attributes the slump to ongoing macroeconomic uncertainty, which is deterring both employers and job seekers from making moves.

Hays, which employs nearly 7,000 consultants worldwide, reported weaker demand for temporary workers in early 2025, while demand for permanent roles—particularly in Europe—remains sluggish following a pre-Christmas dip. Countries such as France, the UK, Ireland, and Germany, Hays’s largest market, are feeling the pressure most acutely.

In the six months leading up to December, Hays reported a 15% drop in group net fees, falling to £496 million from £583.3 million the previous year. Pre-tax profits fell sharply by 67% to £9.1 million, compared to £27.6 million during the same period the prior year. Hays’s share price, already down 25% over the past year, dipped a further 1.8% on Thursday, closing at 71¾p and placing the company’s market value just below £1.2 billion. Despite declining profits, the company will maintain its interim dividend at 0.95p per share.

While the broader UK labor market has shown resilience with limited mass layoffs, businesses remain cautious about expanding their workforce. “Most companies have enough work to retain their current staff, but they’re not looking to increase headcount,” said James Hilton, Hays’s chief financial officer. “Many employees who received pay increases in recent years are not seeking new roles, creating a stalemate. However, over time, people will seek promotions or fresh challenges.”

Recruiters had anticipated a market recovery earlier this year, but Hahn now warns that the rebound may not materialize until 2026. In the meantime, Hays is focusing on its technology recruitment division—its most profitable segment—as it navigates the prolonged global hiring slowdown.

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UK Government Reports Lower-Than-Expected Budget Surplus in January

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The UK government reported a budget surplus of £15.4 billion in January, falling short of economists’ forecasts of £21 billion and the £19 billion predicted by the Office for Budget Responsibility (OBR). Despite January typically seeing a boost from self-assessment tax payments, the lower-than-expected figure has increased total borrowing for the financial year to £118.2 billion—over £11 billion more than the previous year.

The government’s debt-to-GDP ratio now stands at 95.3 per cent, a level last observed in the 1960s. With the OBR set to release updated forecasts on March 26, there are concerns that the government may struggle to meet its goal of reducing the debt ratio by 2029. This could lead to potential spending cuts or tax hikes in the autumn budget.

Reduced debt-servicing costs helped boost January’s surplus, dropping from £9 billion in December to £6.5 billion. However, this was partially offset by a £6 billion one-off expense related to the government’s repurchase of military housing from private firm Annington.

Darren Jones, chief secretary to the Treasury, emphasized the government’s commitment to “economic stability and meeting our non-negotiable fiscal rules.” He also noted that a comprehensive spending review—the first of its kind in 17 years—is underway to ensure that public funds are used efficiently and aligned with national priorities.

 

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