Sir John Gieve, former Deputy Governor at the Bank of England, said the Chancellor may have to hike taxes or impose some ‘very severe reductions and squeezes’ on public services

The pound has fallen to its lowest level in over a year, while UK borrowing costs hit their highest for 16 years. Economists have warned that the rising costs could lead to further tax increases or spending cuts as the government tries to meet its self-imposed rule not to borrow to fund day-to-day spending.

The Pound has tumbled to its lowest level against the US dollar for over a year as government borrowing costs surged sparking warnings that mortgage rates will also rise. Sterling weakened again on Thursday morning amid a deepening rout in UK government bonds,