UK’s long-term borrowing costs hit highest level since 1998

U.K. borrowing costs ticked higher on Tuesday, after an auction of 30-year Treasury gilts brought yields on the long-term bonds hit their highest level in almost three decades.

By 2:02 p.m. London time, the yield on the 30-year gilt — a U.K. government bond — climbed 3 basis points to 5.212% — its highest level since the late 1990s.

The move came after the U.K. Debt Management Office auctioned off £2.25 billion ($2.83 billion) worth of gilts with a 30-year maturity and a coupon of 4.375% at a minimum yield of 5.194%, representing a discount over the bond's face value.

The yield on 20-year gilts added 3 basis points to trade at 5.153%.

Yields on gilts with shorter maturity terms also moved higher on Tuesday.

The U.K.'s 10-year gilt yields gained 3 basis points to trade at 4.641%, while yields on the 2 and 5-year gilts were slightly higher in the early afternoon.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, on Tuesday said that the British bond market was affected by uncertainty both domestically and abroad.

Traders were wary, she told CNBC over emailed comments, that U.S. President-elect Donald Trump's tariff plan could prove inflationary in America and beyond, if upward pressure is put on the dollar or U.S. interest rates and consumer prices are pushed higher.

The U.K. is facing its own spate of problems, with the British economy unexpectedly contracting by 0.1% in October. Inflation is also hovering above the Bank of England's 2% target, after edging higher to 2.6% in November.

On the political front, concerns are lingering about the Labour government's fiscal policies and plans to raise taxes by £40 billion ($50.1 billion) through a raft of new and controversial policies. These include a hike in employer