Published on 23 January 2026

By Lisa Panigrahi and Amarjot Sidhu

Long-term interest rates increased materially during the first three quarters of 2025, both in the UK and advanced economy peers. UK long-term rates then fell back during the fourth quarter, though remain close to their highest levels in over a decade.

The primary driver of the increases in long rates was higher term premia, the compensation investors require for holding long-term bonds instead of a series of short-term bonds.

This rise in term premia can largely be attributed to global factors, such as geopolitical uncertainty and concerns around fiscal sustainability; in the UK, these were amplified by demand and supply factors in the gilt market, with the latter abating later in the year.

Long rates are relevant for the Monetary Policy Committee (MPC) since they can impact the outlook for inflation, albeit more modestly than shorter rates, and can also provide information about market participants’ long-run macroeconomic expectations. The Financial Policy Committee also monitors long rate developments, as sharp moves can crystalise financial stability vulnerabilities.

UK long rates hit their highest levels in over a decade amid a global trend of rising rates through 2025

Long-term government bond yields, spanning maturities of 10 years and longer, increased materially across the UK and advanced economies in the first three quarters of 2025. These increases marked a continuation of an upward trend in long-term rates across countries since 2021.

From the start of January to the peak in early September 2025, the 10-year gilt yield increased by around 20 basis points (bps) to a level of 4.8% and the 30-year by around 50bps to a level of 5.7%. Increases were also observed in other advanced economies (Chart 1), which led to a steepening in yield curves, as measured by the gap between these rates (Chart 2).

UK long rates then fell back between September and end-2025, prompting the yield curve to flatten too (Chart 2). These moves left UK long rates only marginally different to where they started the year, with the 10-year yield down around 12bps overall to a level of 4.5% and the 30-year yield up around 4bps to a level of 5.2%. However, the same is not true for most developed market peers where long rates ended the year materially higher and yield curves steeper than where they started (Charts 1 and 2).

Despite this round trip observed in UK long rates, they ended 2025 at levels which remain close to the recent historic highs, with 10-year yields at levels previously observed in 2008 and 30-year yields at their highest levels since the turn of this century. This level of UK long rates puts them at the top of the levels observed across global peers (Chart 3), in part due to the relatively higher level of UK short rates. This post will focus on the changes to these levels observed over 2025.

Chart 1: Change in 30-year government bond yields since January 2025

Footnotes

• Note: Spot rates used.
• Sources: Bloomberg LP and Bank calculations. Data updated to 19 December 2025.

Chart 2: Change in the difference between 30- year and 10-year government bond yields (10s30s) since January 2025

![A line chart illustrating the yield curve steepness by plotting the gap between 30-year and 10-year government bond yields for the UK and selected advanced economies throughout 2025. The chart shows a steepening trend in the first three quarters, with the gap narrowing (flattening) in the UK during the final quarter, while most peers maintain a steeper curve by year-end.](data:image/jpeg;base64,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