IFS tells Reeves she will have to raise further £9bn for public services

The IFS has warned that Labour will need to find an extra £9bn to fund public services, after Chancellor Rachel Reeves's recent budget.

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gave an interview to the financial news service Bloomberg, insisting to investors that Labour's "number one commitment" was to economic and fiscal stability. "We have now put our public finances on a stable and a solid trajectory," she said.

Jeremy Hunt, Reeves's opposition counterpart, said the market reaction showed Britain was "already paying a price" for Labour's extra borrowing. "[This will mean] more expensive mortgages and higher debt interest payments for taxpayers. If you preach stability you should practise it."

Much of the impact for households and businesses will depend on whether the financial market reaction is sustained. Should the rise in borrowing costs persist, forcing the Bank of England to keep rates higher for longer, high street lenders that use money market rates to price their loans could push up the cost of mortgages.

The Bank is expected to cut headline interest rates from 5% to 4.75% when its policymakers meet next Thursday. However, City investors said it could stop short of reducing its base rate to below 4% by the end of next year, a higher level than previously anticipated, in light of Reeves's budget.