Warning as further tax rises are on the cards to meet fiscal rules, economists say

FURTHER tax rises are on the cards to meet fiscal rules, economists have warned.

Borrowing costs hit their highest level for almost 17 years yesterday amid a continued sell-off in the bond market.

The yield on ten-year gilts, which reflect borrowing costs, hit 4.81 per cent, the highest since 2008.

Kallum Pickering, at brokerage Peel Hunt, said: “If bond yields rise further, the Chancellor may be forced to make the economically damaging decision of further increasing taxes or cutting back on planned public spending.”

The PM’s spokesman said: “Having stability in public finances is precursor to economic growth.”

Shadow chancellor Mel Stride said: “We shouldn’t be raising taxes to pay for fiscal incompetence.

“Labour’s decision to allow debt to continue rising ever higher leaves us vulnerable even to small changes in markets.”

The yield on 30-year gilts was last so high in 1998 when Tony Blair was PM during financial crises worldwide.

They are trading higher now than after former PM Liz Truss’s mini-Budget, as the markets bet against UK growth prospects.

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Further tax rises are on the cards to meet fiscal rules, economists warn[/caption]