UK long-term borrowing costs surged to their highest level since 1998 on Tuesday, with 30-year gilt yields reaching 5.78 per cent, as Middle East tensions fuel inflation concerns.

The Bank of England is now expected to raise interest rates two to three times this year to combat resurgent inflation driven by soaring oil prices, reversing expectations of rate cuts earlier in the year.

UK debt servicing costs already exceed £100bn annually, and gilts have underperformed other major markets as investors flee the country's energy vulnerability and upcoming local elections.

Traders are betting on multiple BoE hikes by year-end, with political uncertainty adding pressure ahead of this week's electoral tests for Prime Minister Keir Starmer's government.