The Resolution Foundation warns that escalating borrowing costs will likely require the UK government to increase taxes or implement spending cuts to adhere to its fiscal rules. A recent report highlights that the UK is now paying £7 billion more in annual interest on debt compared to previous budgets. While Chancellor Rachel Reeves is pursuing growth strategies, the Foundation indicates that failing to meet fiscal obligations could destabilize markets. The government's fiscal commitment remains steadfast, as officials assert it is 'non-negotiable,' despite external pressures.
Higher borrowing costs for the UK government could compel tax rises or spending cuts to honor its fiscal rules, warns the Resolution Foundation.
The government is now paying £7 billion more annually in interest on its debt compared to the time of the last Budget, creating significant fiscal pressures.
Resolution Foundation's James Smith highlights the Chancellor's need to either comply with fiscal rules or face further market jitters.
The government’s commitment to fiscal rules is described by officials as ‘non-negotiable’ despite the rising pressures from international borrowing costs.
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