The pound falls further as borrowing costs rise again.

The pound has fallen to its lowest value against the dollar since November 2023 as government borrowing costs continue to rise.

The pound fell to $1.21 on Monday morning as recent selling continued.

Meanwhile, the rate at which the government can borrow money – known as yields – rose again, hitting its highest level since 2008 by one measure.

Borrowing costs are rising for many countries around the world, although some have said the budget decisions have left the UK particularly vulnerable.

Governments usually borrow money by selling bonds to large investors such as pension funds. UK government bonds are known as gilts.

The yield on the 10-year gilt – the interest rate at which the government pays back decades-long debt to investors – rose to 4.86 percent, a 17-year high.

The 30-year gilt rose to 5.42 percent, its highest level in 27 years.

Government borrowing costs in Germany, France, Spain and Italy also rose on Monday.

Some experts say that investors are reacting to the re-election of the former US president. Donald Trump and his talk about tariffs.

There is concern that this will lead to inflation being more persistent than previously thought, and therefore interest rates not coming down as quickly as expected, both in the US and elsewhere.

Strong U.S. jobs data released on Friday also added to expectations that U.S. rates will remain high for longer, helping the dollar strengthen against other currencies.

However, Emma Wall, head of platform investors at Hargreaves Lansdown, said the UK’s problems were not purely due to global issues, saying the measures announced in the Budget had pushed up inflation.

“If you can get inflation under control, you will see interest rates come down in the UK,” he added.

at the end of the week, Chancellor Rachel Reeves defended her decision to travel to China. Improving economic relations with the country at a time when gilt production was increasing.

The Conservatives said she had “run away to China”, but Reeves said deals struck in Beijing would be worth £600m to the UK over the next five years.

Reeves also faced questions over his self-imposed fiscal rules on government debt and spending, which he said Saturday were “non-negotiable.”

Despite her commitment, some have questioned whether she will be able to achieve the goals without further cuts or tax hikes given how government borrowing costs have risen.

On Monday, Prime Minister Sir Keir Starmer redoubled his commitment to fiscal governance. She also defended Reeves after being asked if she would still be chancellor until the next election.

“He has my full confidence. He has the full confidence of the entire party.”

The government has made growth of the UK economy a key objective, but recent figures show that economic growth was zero between July and September, while it contracted during October.

Businesses have warned that Budget measures, such as increasing employer National Insurance contributions, could lead to job cuts and price rises, along with higher national wages.

Rupert Soames, head of the Confederation of British Business (CBI), said the picture was “not good” but insisted firms and investors still had some optimism.

“I wouldn’t say the confidence is gone,” he told the BBC’s Today programme. “I’d say he’s hurt.”

However, he said the government was making the situation worse. Introducing the Employment Bill of Rightswhich he said contained “powerful barriers to employment”.

Unions say the protections introduced in the bill, such as bans on fire and re-employment, protect workers, while the government has said it “represents the biggest upgrade in employment rights for a generation.” does”.

However, Mr Soames said the bill would lead to job losses. “Businesses will not only not hire, they will let people go,” he said.

As part of its push for development, The government announced the plans on Monday. Making the UK the world capital of artificial intelligence through initiatives such as building a new supercomputer.

Starmer said technology had “huge potential” to rejuvenate Britain’s public services, but the Conservatives described the plans as “uninspiring” and criticized Labour’s “economic mismanagement”.