UK long-term borrowing costs have hit their highest level since 1998, as a global bond selloff heaps pressure on the Chancellor ahead of his first Budget on October 28.

The yield on 30-year gilts reached 6.03 percent on October 1, the highest since 1998, while the 10-year yield climbed to 5.5 percent, its highest since July 2007, Trading Economics data shows. Yields move opposite to bond prices: when yields rise, borrowing gets more expensive for the government.

Markets now expect the Bank of England to begin raising rates as early as November, with four hikes priced by July 2027. Governor Andrew Bailey has signalled growing openness to tightening as energy prices keep inflation above target.

The selloff spilled into equities, with the FTSE 100 tumbling 2 percent. Chancellor John Healey faces a narrowing path on public finances, with national debt at 94.1 percent of GDP.

The rout came even as Brent crude fell back below $100 a barrel on signs Middle East oil flows are returning to pre-war levels.