Rachel Reeves heads to China as pressure mounts as market turmoil derails government’s economic strategy

Rachel Reeves is travelling to China as she faces increasing demands to deal with the UK's financial deficit following a sharp rise in the country's borrowing costs to their highest level since the 2008 financial crisis.

There are warnings that interest rates on mortgages may increase if the economic problems do not ease.

According to reports, the Chancellor is apparently contemplating the introduction of even deeper spending cuts across various departments if required, having already ruled out the possibility of increasing either borrowing or raising taxes.

The government's objective is to enhance the quality of life nationwide.

Any further spending cuts could be announced in the Chancellor’s planned fiscal statement on March 26, ahead of a spending review that has already required Government departments to find efficiency savings worth 5% of their budgets.

The prospect of additional spending reductions follows a rise in the yields on government bonds, which reflect the cost to the Government of raising funds through borrowing.

Interest rates on government bonds continued to climb on Thursday, going up by eight basis points to a new high of 4.89% for 10-year gilts, the largest since 2008.

These yields settled later on Thursday afternoon, sitting one basis point higher for the day at 4.82% when the London market had closed.

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The increase in the cost of servicing government debt may eat into Labour's expected financial leeway, which is a concerning indication of how investors perceive the sustainability of the UK's finances.

(IFS), signifying relentless higher interest rates might compel the Chancellor to take action or contravene the fiscal rules she established at the Budget in October.

Ms Stockton added: "If meeting the fiscal target depends on new tax increases, or cuts to the already limited spending budget for the next spending review, then the Chancellor – and we – should not be surprised."

The Chancellor has previously dismissed the possibility of both increasing borrowing and raising taxes, in the aftermath of significant tax hikes in the October budget, leaving her with limited alternatives other than further spending reductions.

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in her place.

Mr Jones said the trip was "crucial" for UK trade and would go on.

While Mr Stride stated the government is making a "panicked attempt to reassure the markets", Mr Jones maintained that the bond market is operating in an "orderly manner".

Mr Jones also pointed to global factors affecting the gilt market, saying there was "no need for emergency intervention".

It could introduce a tariff policy which would have a potentially inflationary effect on many international economies.

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