Financial markets have responded negatively to the Budget, sending borrowing costs higher over fears that Rachel Reeve's tax-and-spend plans will fail to boost growth.

Bonds, shares and the value of the pound fell as traders dumped UK assets in a swift rebuke of Ms Reeves’s debt-fuelled spending plans.

Meanwhile, economists at the Institute for Fiscal Studies (IFS) said that Ms Reeves would be forced to raise taxes by another £9billion later in this parliament, despite her record-breaking £40billionn raid in Wednesday’s Budget.

The Telegraph said UK 10-year borrowing costs hit their highest levels in a year, rising to 4.582% as investors fretted about the Chancellor’s £32billion-a-year increase in borrowing.

The lurch upwards pushed the gap between British and German borrowing costs to their widest since the wake of the Liz Truss mini-Budget, reflecting the extra premium on UK debt.

The Chancellor scrambled to calm investor nerves on Thursday, insisting that the “number one commitment” of the Labour Government was “economic and fiscal stability”.

“Public finances are on a stable and a solid trajectory,” she told Bloomberg.

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