UK government borrowing costs rose sharply on Friday as a shock decision by chancellor Rachel Reeves to ditch a planned income tax rise hit market confidence in her Budget and fuelled a crisis engulfing the Labour administration.
Reeves and Prime Minister Sir Keir Starmer this week decided to rip up the Budget, partly as a result of improved economic forecasts but also because they got cold feet about breaking an election pledge not to raise income tax rates.
One senior government official said: “I won’t deny politics was a factor. But the changing economics meant that the political argument for breaking the manifesto was weaker.
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