Food prices could rise by a fifth as financial crisis looms

Fears of recession fuel calls for Reeves to cancel trip to China

- DAVID MADDOX and KATE DEVLIN

Rachel Reeves has been hit by a triple whammy of setbacks that appear to have shattered Labour’s dreams of boosting Britain’s economic growth. With the chancellor set to fly to China today, the pound fell amid fears of surging borrowing costs and future tax rises – and a shocking new report seen by The Independent suggested that the price of food and household staples could rise by 20 percent.

The Chartered Institute of Procurement and Supply (CIPS) revealed that massive problems with supply chains and trade routes, exacerbated by Brexit, will see imports cost between 5 and 20 percent more, fuelling a new cost of living crisis.

The fresh concerns emerged as the chancellor came under severe pressure to cancel her controversial trip to China, with Britain’s economy facing another tumultuous day on the markets. As well as problems with the UK’s supply chains, a series of indicators linked to Ms Reeves’s Budget last October have put the UK on the cusp of a financial crisis and recession.

These include:

• Gilts underpinning government debt at a higher level than during the crisis that forced Liz Truss out of office

• Concerns that Ms Reeves will shortly be forced to abandon her "golden rule" on borrowing

• Fears that she will be forced to raise taxes further in the spring

• Business confidence falling to an all-time low, with chief executives claiming that Labour lied to them before the election

• Wages and recruitment stagnating as a result of the hike in national insurance