// BBC BUSINESS NEWS — FINANZA
Why are UK borrowing costs rising and what does it mean for me?
UK government borrowing costs have been rising, with some now at their highest level since 1998 as investors around the world worry about inflation.
A bond is a bit like an IOU that can be traded in the financial markets.
Governments generally spend more than they raise in tax so they borrow money to fill the gap, usually by selling bonds to investors.
As well as eventually paying back the value of the bond, governments pay interest at regular intervals so investors receive a stream of future payments.
UK government bonds - known as "gilts" - are normally considered very safe, with little risk the money will not be repaid. They are mainly bought by financial institutions, such as pension funds.
Interest rates - known as the yield - on government bonds have been going up, with the yield on a 10-year bond at its highest level since 2008, while the yield on a 30-year bond is at its highest since 1998, meaning it costs the government more to borrow over the long term.
This comes at a sensitive time for new PM Andy Burnham and Chancellor John Healey as they prepare for their first budget on 28 October.
The government's ability to play with the public finances is limited by the so-called fiscal rules it has set for itself.
So, if it needs more money to pay back higher borrowing costs, it has less to spend on other things (under its self-imposed rules).
The possibility now looms of less support for households struggling with the cost of living, or of tax rises to pay for any support.