On May 12, UK 30-year gilt yields surpassed their 1998 high, climbing above 5.2% as political upheaval in Westminster fueled investor risk aversion and drove demand for higher yields on long-term debt.

The jump in long-term borrowing costs is expected to increase funding expenses for UK banks, tighten swap valuations and compress net interest margins, with institutions like Lloyds Banking Group likely to face higher hedging and capital deployment challenges.