Published on 6/19/2026
Bloomberg reported that interest on British Treasury bonds rose after Andy Burnham, one of the most prominent politicians in the Labor Party, won the by-election in the Makerfield constituency in England, paving the way for him to challenge British Prime Minister Keir Starmer for the leadership of the party.
The interest on 10-year British Treasury bonds rose by 0.05 percentage points to reach 4.8%, which is one of the most prominent tools that the British government relies on to borrow from the markets.
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Market traders fear a state of political instability, with the possibility that Burnham, the mayor of Greater Manchester, will be able to oust Starmer, at a time when Britain is witnessing great economic pressures, especially the continuing rise in the public budget deficit.
Record number of loans
The volume of British government loans reached 23.3 billion pounds ($31.35 billion) last May alone, according to figures announced today, Friday, by the Office of National Statistics, and published by the Financial Times, and represents an increase of 30% over government loans in the same month last year.
The increase in loans is due to the increase in the British government’s expenditures to finance energy subsidy and social assistance programs on the one hand, and the rise in the interest rate on British bonds on the other hand.
The value of interest paid by the British government on the bonds it relies on to finance the public budget deficit rose in May to about 11.7 billion pounds ($15.8 billion), which is the highest monthly interest cost recorded.
The Financial Times pointed out that the large deficit of the British public budget last May, which is the second highest monthly deficit on record, highlights the fragility of public finances in Britain, and the major problems that Burnham could face if he is able to reach the presidency of the government.
British Treasury Secretary Rachel Reeves was forced to increase borrowing to finance the cost of the social welfare programs that the Labor Party pledged to its voters, and the rise in inflation contributed to increasing their cost.
Huge debt
The British government’s debt now amounts to about 3 trillion pounds (about 4 trillion dollars), according to figures published by the Telegraph newspaper.
The Telegraph noted that the annual debt interest bill has become larger than the budget for England’s schools, in addition to the fact that Britain’s economy is suffering from declining levels of growth.
The Telegraph added that there is a need to provide tens of billions of pounds sterling for defence, which because Starmer was unable to fulfill, former Defense Secretary John Healey recently resigned, justifying this by not spending enough on the army.
Burnham has hinted that he would support radical tax reforms, the nationalization of some public utilities, and increased allocations for low-cost housing, but the state of public finances in Britain means that he will face a difficult task if he is able to oust Starmer.
