Business
UK borrowing costs ease as bond market calms
UK government long-term borrowing costs have eased after reaching their highest level since 1998 earlier in the week.
The interest rate on 30-year government bonds, known as the yield, slipped to 5.57%, dropping from a high of 5.75% on Wednesday. Analysts said a fall in US borrowing costs had a knock-on impact on UK bonds.
Although bond yields have been rising globally recently, there have also been market concerns about UK government finances.
However, Bank of England governor Andrew Bailey said on Wednesday that it was “important not to focus too much” on longer-term bond yields.
He told the Treasury Committee that interest rates had been rising “across the developed world”.
The UK was not alone in seeing borrowing costs rise earlier in the week, with yields on 30-year German, French and Dutch bonds climbing to their highest since 2011.
In the US, 30-year Treasury bond yields rose to their highest in more than a month.
Factors such as geopolitical tensions, US President Donald Trump’s trade policies and high levels of government borrowing have been behind the increases.
Mr Bailey told the Treasury Committee that the 30-year yield on UK bonds was “quite a high number but it is not what is being used for funding at all at the moment actually”.
Governments borrow money from investors by selling bonds – which is a loan the government promises to pay back at the end of an agreed time.
The yield on 30-year UK government bonds – which are known as gilts – has been rising for a number of months.
The US bond market, which is seen as underpinning the global financial system, has also seen pressure due to concerns about high debt, the impact of Trump’s tariffs on inflation, and worries about the independence of the Federal Reserve after Trump’s order to fire one of its governors.
After rising to nearly 5% for the first time since mid-July on Wednesday, US 30-year bond yields slipped back to about 4.88% after data showed job openings fell in July.
This reinforced expectations of an interest rate cut by the US central bank, the Federal Reserve, later this month.
In the UK, although the Bank of England has been cutting rates, Mr Bailey said that “there is now considerably more doubt about exactly when and how quickly” rates will be cut further, reiterating his comments after August’s rate cut.
Paul Dales, chief UK economist at Capital Economics, said that the fall in yields on long-term UK government bonds was partly due to interest rates on US bonds slipping in reaction to economic data.
“This is a timely reminder that worries over the UK’s fiscal future is not the only, and often not the most important, driver of UK 30-year yields,” he said.
OpenAI has elevated its cash burn forecast this year through 2029 to a total of $115 billion. The company’s recent cash burn expectation is also $80 billion higher than it previously projected.
According to a report by The Information, the surge in cash burn for OpenAI comes at a time when it’s ramping up spending to power the artificial intelligence behind its popular ChatGPT chatbot. The tech firm has also become one of the world’s biggest renters of cloud services.
OpenAI plans to develop its chips and data center facilities
The source revealed that the AI company expects to burn over $8 billion this year. OpenAI had forecasted early in the year that it would only burn around $1.5 billion.
According to the report, OpenAI doubled its cash burn expectations for 2026 to more than $17 billion, surpassing its previous forecast of $10 billion. The firm also projects a $35 billion cash burn in 2027 and $45 billion in 2028.
The FT also disclosed on Thursday that the Silicon Valley startup plans to develop its data center server chips and facilities to power its technology. According to the report, the initiative aims to control the tech company’s surging operational costs.
The firm relies on substantial computing power to train and run its systems. The company’s CEO, Sam Altman, has also advocated the need for increased computing power to accommodate the growing demand for AI products such as ChatGPT.
Deloitte’s 2025 AI infrastructure Survey revealed that the energy demands of AI are straining traditional power grids. According to the study, 79% of executives anticipate increased power demand through the next decade, with grid stress emerging as a top challenge.
The source added that U.S. semiconductor giant Broadcom will partner with OpenAI to produce the first set of chips and start shipping them by next year. Also, OpenAI allegedly plans to use the chips internally rather than selling them for external clients.
Broadcom’s CEO, Hock Tan, hinted the company had partnered with an undisclosed customer that committed to $10 billion in orders. During a call with analysts, he revealed the firm had secured a fourth customer to boost its custom AI chip division. Tan stated the collaboration with OpenAI has enhanced its growth outlook for fiscal 2026 by generating immediate and substantial demand.
OpenAI partners with Broadcom to produce chips
OpenAI also partnered with Broadcom and Taiwan Semiconductor Manufacturing Co. (TSMC) nearly a year ago to develop its first in-house chip. The firm was also planning to add AMD chips alongside Nvidia chips to meet its surging infrastructure demands.
OpenAI revealed in February plans to reduce its reliance on Nvidia’s chips. The firm said it will finalize the design of the new chip in the next few months and then send it to TSMC for fabrication. OpenAI’s initiative also builds on its ambitious plans to increase its semiconductor production at the Taiwanese company next year.
According to the report, OpenAI hopes to use the new chips to strengthen its negotiating leverage with other chip suppliers, including Nvidia. The company’s in-house team, led by Richard Ho, will design the chip to produce advanced processors with broader capabilities with each new iteration.
OpenAI collaborated with Oracle in July to launch a 4.5-gigawatt data center. The initiative also complements the firm’s $500 billion Stargate project, including investments from Japanese firm SoftBank Group. The tech giant has also collaborated with Google Cloud to supply computing capacity.
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Big numbers often get thrown around in the aftermath of legal battles, as judges hand down judgements—or attorneys arrange settlement amounts—in the tens, or hundreds, of millions of dollars. Still, even jaded legal observers can occasionally run into a genuinely daunting number while parsing this stuff. Like, say, the $1.5 billion settlement that AI company Anthropic has agreed to pay in the ongoing class-action suit against it, launched by authors who said the company infringed on their copyrighted works by feeding them as training data to its “AI assistant” Claude. Sure, parts of that sum (calculated at $3,000 per work for a staggering number of works, and with its first $300 million installment due just five days after the settlement is approved) might potentially vanish in a puff of future bankruptcy. But it’s still the “largest publicly reported copyright recovery in history,” according to legal documents from the authors’ attorneys.
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