Brexit: European interest rates rise may push up UK’s divorce bill by £5bn

Christine Lagarde, president of the ECB, addresses a news conference in Frankfurt. Photograph: Wolfgang Rattay/Reuters

Increasing interest rates in Europe could push up the UK’s Brexit divorce bill by £5bn, the government’s Treasury office has said.

The new estimate comes as the European Central Bank increased its interest rates for the first time in 11 years by 0.5 percentage points, ahead of the 0.25 percentage points expected by economists.