KEIR Starmer has said he does “not accept” that Labour efforts to fiddle borrowing rules will result in Liz Truss-style mortgage hikes.
Following a speech on Monday, the Prime Minister was asked about reports Chancellor Rachel Reeves may rewrite the fiscal rules in order to borrow more money for investment.
The suggestion, first reported by The Guardian, saw yields on government bonds rise last week.
Gilt yields were up by around six basis points while the yield on two and 10-year-gilts was up by around four basis points, as of Thursday last week, according to the Reuters news agency.
Major movements in gilt yields, which refers to the interest paid to investors buying Government debt, spook markets as they are regarded as reliably steady investments.
They played a major role in ending Truss’s short-lived premiership after her decision to borrow to fund tax rises triggered market chaos and saw many households’ mortgage payments spike.
Asked about whether the Government was concerned Reeves’s borrowing rules workaround could trigger a similar response, Starmer said: “I’m not going to pre-empt exactly what the Chancellor will say on Wednesday but I have been really clear that we have to move to a situation where we invest in the future of this country, where we invest to ensure that we get the better jobs that we need, we have the infrastructure that we need.
“Part of what we will say on Wednesday is first how we’re going to fix the foundations and deal with the problem that we’ve inherited but secondly how then we rebuild the country and investment is an important part of that story. Precisely how that will take place will be set out in detail on Wednesday. I do not accept the proposition that it will have an impact on interest rates.”
Elsewhere, Starmer risked the wrath of English metro mayors by confirming that the £2 cap on bus fares south of the Border would come to an end, with the price cap to rise to £3 until the end of 2025.
He said the scheme, launched by the Tories, was only funded to the end of the year, adding: “I do know how much this matters, particularly in rural communities where there’s heavy reliance on buses.”
