UK borrowing costs rise at fastest pace in G7 after Burnham signals flexible fiscal rules

UK borrowing costs rose at the fastest pace among G7 nations after new Prime Minister Andy Burnham indicated he would take a flexible approach to the country's fiscal rules, spooking financial markets. In his maiden speech, Burnham said he would use 'flexibility' within existing fiscal rules, leading to a rise in 10-year gilt yields to 5.03%, an eight-week high. The rise was the fastest in the G7 excluding Japan. After markets closed, Burnham surprised the City by appointing John Healey as Chancellor, replacing Rachel Reeves. Healey, a veteran of the Blair-Brown government, may calm fears. The Resolution Foundation warned that boosting public financial institutions by £16bn could cost £400 million annually in debt interest. Higher borrowing costs threaten to increase the government's debt interest bill, already forecast at £111.2bn for the financial year, equivalent to 8.3% of public spending. Burnham promised measures to help households with the cost of living, to be announced Tuesday.