Rachel Reeves is facing warnings about a financial crisis today as markets batter Britain’s borrowing costs.
Ministers are struggling to cool alarm after interest rates on UK gilts rose again this morning, having spiked to 27-year highs yesterday.
The grim moves have fuelled questions over how the Chancellor will service the country’s debt mountain.
Ms Reeves’ Tory predecessor Ken Clarke is among those raising concerns that a crunch is ‘much nearer’ than the government is admitting.
He suggested it is not impossible that Britain will be forced to go to the IMF for help – something that Callaghan’s Labour government did during the Sterling crisis in 1976.
Ms Reeves is expected to confirm today that the Budget will be held on November 26, later than many had anticipated.
But Tories have cautioned that ‘damaging uncertainty’ cannot be allowed to continue for another three months.
Rachel Reeves is facing warnings about a financial crisis today as markets batter Britain’s borrowing costs
Interest rates on 30-year UK gilts went up again in early trading this morning reaching 5.75 per cent
Economists have also been warning that Ms Reeves cannot rely on tax hikes alone to fill a black hole in the books that could be as much as £40billion or £50billion.
Many believe ramping up the burden on Brits further would only suppress growth and create a ‘doom loop’ where taxes need to be increased again.
Although government borrowing rates around the world have been surging, the UK is seen as particularly badly hit – partly because inflation is running higher here.
Yields on 30-year UK bonds, known as gilts, leapt to 5.7 per cent yesterday, the highest level since 1998 in the wake of Keir Starmer’s reshuffle seen as sidelining Ms Reeves.
The rate went up again in early trading this morning reaching 5.75 per cent.
Investors are betting that more bonds will need to be issued to finance further borrowing.
They are also alarmed about inflation running at an 18-month high and expected to climb towards 4 per cent.
There are warnings that yields could surge to more than 6 per cent by the end of the year, potentially triggering a crisis.
Yields on 30-year UK bonds, known as gilts, leapt to 5.7 per cent yesterday, the highest level since 1998 in the wake of Keir Starmer’s (pictured) reshuffle seen as sidelining Ms Reeves
