Reeves told she will have to raise further £9bn to avoid UK public service cuts

Rachel Reeves, second from left, and Keir Starmer, first right, speak with staff during a visit to University hospital Coventry. Photograph: WPA/Getty Images

Rachel Reeves has been warned an extra £9bn of tax rises may be required to avoid a fresh austerity drive in key public services as her record tax-raising budget sent tremors through the financial markets.

Threatening to undermine the chancellor’s claim that her budget would restore economic stability to Britain, government borrowing costs rose sharply in the City on Thursday as traders turned on Reeves’s tax and spending measures.