Reeves’s plan to ditch income tax rise prompts government bond sell-off

The pound also sold off against the US dollar on the foreign exchange markets, reflecting mounting investor unease over the make-or-break budget. Photograph: Hollie Adams/Reuters

UK bond markets took fright on Friday after it emerged that Rachel Reeves had ditched plans for a manifesto-busting increase in income tax at this month’s autumn budget.

On a day of choppy trading in the City, the cost of UK government borrowing rose by the most in a single day since early July, when a tearful appearance by Reeves in parliament spooked investors.