Rachel Reeves accused of risking mortgage misery with £50 billion borrowing blitz

Rachel Reeves was accused of risking mortgage misery for millions after rewriting debt rules so she can borrow up to £50 billion in the Budget.

On a visit to Washington, the Chancellor confirmed she is planning an infrastructure spending blitz next week.

It sent the cost of state borrowing up and experts now expect the Bank of England to rein in cuts to interest rates.

Downing Street denied the Chancellor would "do a Liz Truss" and destabilise market confidence, insisting the October 30 statement would do "quite the opposite".

Shadow chancellor Jeremy Hunt said: "Rachel Reeves announced her plans to fiddle with her fiscal rules and borrow up to £50 billion more to fund further reckless spending.

"She made this announcement not to Parliament, but to the IMF in Washington.

"She's treated the public with contempt by breaking her promises during the election.

"And she's treated Parliament with contempt by making an important announcement about our country's future to citizens of another country.

"Let me be clear; the advice I received consistently whilst Chancellor was that any additional borrowing would mean higher interest rates for longer.

"Meaning if the Chancellor goes ahead with £50 billion of extra borrowing there will be misery for millions of mortgage holders across the country."

Ms Reeves is planning to tweak one of the fiscal rules she committed to before the general election that says debt must be falling within five years.

She is expected to strip out student loans as liabilities and count how much is expected in repayments as an asset as part of the wider overhaul of the way the government measures debt.

Such a change would have created an extra £53 billion in "headroom" if it had been used in the last Budget in March.

The Chancellor told ITV News: "Our second rule, our investment rule, will change the way in which we measure government debt so we take into account our assets, not just the costs of investment.

"What I hope that people will see in the Budget next week is that I'm a responsible Chancellor being honest and transparent about the situation with the public finances and indeed the trajectory for public services, but that - in that situation and the difficult choices - that we've done everything in our power to protect working people, to begin to fix the NHS and to start to rebuild our economy and fix the foundations of our economy."

Ms Reeves confirmed that taxes will rise to meet her day-to-day spending needs.

Nick Winters, partner at accountancy firm Blick Rothenberg, said: "Corporates, individuals and their advisers want honesty, transparency, fair taxes and long-term economic growth and confidence.

"They do not want quick fixes; they want carefully planned and expert led policies that think further ahead than the next election and beyond party politics.

"It is now becoming common practice for Chancellor's to leak much of the intended content of their budgets in the weeks beforehand. But these suggestions have been spooking the markets with fear that the UK's borrowing costs have now increased."