Reeves presses ahead with plans to borrow billions for investment

Rachel Reeves is pushing ahead with plans to borrow billions of pounds extra for infrastructure investment, the Guardian has learned, despite concerns about the rising cost of UK government debt.

- Kiran Stacey

The chancellor told the cabinet yesterday she wanted to change how the Treasury accounted for capital spending to reflect its benefits. Allies said she intended to finalise her debt rule in the coming days.

The decision, which will be confirmed to the Office for Budget Responsibility (OBR) as soon as today, will allow the government to borrow tens of billions more for capital spending during this parliament.

Whitehall sources say Reeves is committed to the plan despite a recent rise in the government's borrowing costs, which some market experts have blamed on the prospect of higher debt, but which others say is more connected to the US economy.

Reeves briefed cabinet colleagues yesterday about her budget and the one-year spending review, which will be announced at the same time.

A No 10 spokesperson said afterwards: "One of the first steps of this government is to restore economic stability, and the budget will absolutely deliver on that." They added that this would mean “delivering on the robust fiscal rules that were set out in the manifesto... that includes debt falling as a share of the economy”.

Others briefed on the meeting, however, said that the chancellor had stressed the importance of capital spending - seen as a sign that she still intended to change the debt rule.

In its manifesto, Labour committed to balancing day-to-day expenditure with tax receipts and getting debt falling as a share of the economy in the fifth year of forecasts.