Yesterday, borrowing costs, the amount the government pays in interest on debt, hit their highest level in nearly 30 years.

The high costs threatens to eat into the small amount of money set aside by Rachel Reeves in her Spring Statement last month.

Government gilts rose to 5.65% on Wednesday, a level not seen since 1998 and higher than in the fallout from Liz Truss’s mini-Budget.

The cost also surpassed the previous record high seen in January, which forced Rachel Reeves to announce major spending cuts in last week’s spring statement in order to stick to her self-imposed spending rules.

Should the cost of gilts remain high, meaning it is more expensive for the Government to borrow money, it would force the Chancellor to announce further spending cuts or tax hikes in her Budget later this year.

Chris Beauchamp, chief market analyst at IG Group, explained: “While this is nothing compared to the mini-Budget-induced surge of 2022, it certainly piles on the pressure for Rachel Reeves.

“She can legitimately point to the crisis being manufactured in the US, but that is small comfort when the UK economy may well be on its way to a recession.

“The Government will find its room for manoeuvre limited unless the Chancellor drops her fiscal rules.”