Rachel Reeves was given a warning this month how the most carefully plotted budget strategy can be blown off track by turmoil in financial markets.
Calm has been restored, for the time being, but the lingering effect has been to increase the UK government’s cost of borrowing.
If higher interest rates persist, the chancellor could be forced to allocate more of her budget to debt interest payments and, to stay within borrowing constraints, raise taxes or make spending cuts.
Can Labour generate enough growth?
A reduction in government spending to fund higher debt payments will be a blow to Reeves, who is desperate to kickstart economic growth. However, Tre...
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