Government borrowing costs have risen to their highest levels since April. (Image: Getty)
The pound has fallen to its lowest level in nine months as the continue to rise, sparking fears of .
Yesterday, the pound fell to its lowest level since April last year, dropping to $1.1233 against the dollar, a fall of 1.1%.
The plummeting pound comes as the cost of borrowing and the government’s interest in its debt rose to its highest level since the 2008 financial crisis when the global economy came close to grinding to a halt.
The fall has led to economists warning of tax rises and cuts to government spending plans, just months after announced £40 billion of tax rises in her .
According to several media reports, a spokesperson for the Treasury said: “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the government will have an iron grip on the public finances.”
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The Chancellor’s budget announced a series of tax hikes. (Image: Getty)
The government is not expected to make any public comment before March’s official borrowing forecast which predicts the government’s projected public sector borrowing for
Since coming to power in July, the government has reiterated its desire to “balance the books” and has introduced a whole raft of unpopular measures that it believes will address the “£22 billion black hole.”
On Tuesday, Sky News reported that public sector budgets could be published even further than expected due to the worsening financial situation.
has criticised the government’s approach to fiscal policy, claiming that their budget announcements are making it more expensive for the government to borrow”.
He said on X: “We should be building a more resilient economy, not raising taxes to pay for fiscal incompetence,” he said in a post on X.”
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Policies to increase income such as the winter fuel payment have been highly controversial. (Image: Getty)
The government borrows money to address the difference between what they spend and what they generate through things such as taxes, with spending usually outstripping income. The difference is known as the deficit.
The deficit is often filled by borrowing in the form of bonds, which are sold to investors with the promise of paying back more than they borrow.
Yields on government bonds, the amount the government pays back for generating income, have risen sharply in recent years and fluctuate frequently.
Prior to the budget, yields sat at 4.04% but have risen significantly since, finishing the day on Wednesday at 4.79%, their highest level since April.