Far from lifting the spectre of higher borrowing rates and reluctant lenders, her big spending boost just puts off further tackling the necessary task of getting debt and therefore interest charges under control. All of us and our children and grandchildren will  be paying for Reeves' debts for years to come.

Rachel Reeves is building a debt mountain whilst claiming to bring the debt down. She wants to add a staggering £628bn to the state debt over the next five years, as if the £3 trillion the government has already borrowed was not enough.

She only brings in some tax rises at the end of the period to pretend late in the day to be doing something about her borrowing habits. Who believes those tax rises will take place, as they will be after the next election when Rachel Reeves is unlikely to still be in charge? She obviously thinks it easier to pencil in tax rises for the next government after she has gone than to actually impose them now to stem the borrowing.

Worse still for the bond market that she wants to provide her with all the money, is her need to borrow yet another £675bn to be able to replace existing debts as they fall due. It is like watching someone who wants to go on a spending spree aim to take out a large overdraft, only to find they also need a pile of cash to repay the mortgage they already have when it expires.

Asking the bond markets to find another £1,300 billion (or £1.3 trillion) is asking a lot. The Bank of England is a seller of bonds, no longer a buyer.  It is now  making it more difficult for the government to lay its hands on cheap cash by selling bonds at the same time as the government is trying to raise money. The pension funds which over the years have bought billions of government debt are maturing. The ones that bought many more bonds than they can afford are having to rein in their bond buying habits after making some big losses on them. It’s going to get tougher for the government to borrow so much money than it was in 2020 to pay the Covid lockdown bills. Then state debt was lower, and the Bank and the pension funds were  keen buyers.

Far from liberating herself from the discipline of the bond market, she needs to go more carefully. Far from bringing debt down she envisages a huge expansion and a need for major refinancing. She is right to say spending more than £100bn each year on interest on debt is unacceptable. So why then is she planning to put that bill up to £125bn or more with all her extra and dearer borrowing? What other taxes will she raise to pay all that extra interest?

Rachel Reeves is on the political rack. She is being accused of dishonesty over the OBR forecasts, which showed she did not face a large black hole as she implied. She and her advisers have failed so far to institute a leak enquiry to see how so many apparently well informed leaks about the budget got into the media and newspapers ahead of the event. She is being criticised for herself holding an emergency news conference to tell the nation one morning that things were so dire she needed to raise taxes. She is being criticised by the hospitality and retail sector for promising lower rates bills when she cancelled their discounts and allowed the rateable values for many to go up.

Now Facts4EU point out that far from reducing the debt as she implied, she will be boosting it massively and having to refinance very large loans as they fall due for a repayment she cannot afford. This is no way to run a major economy. It is bad for business, bad for jobs, and bad for confidence. Above all it is bad for all the people who now have to pay the bigger bills for an ever expanding state that does not know how to nurture growth and keep its promises.

Observations

In this report we have revealed a ticking time-bomb in the Chancellor’s Budget. While many articles have been written in recent days about the Budget’s predicted rise in overall national debt (to £3.5 trillion), everyone has missed this explosive element contained deep in HM Treasury’s figures underlying Rachel Reeves’ budget.

The simple fact is that the embattled Chancellor has to go to the markets, cap in hand, and attempt to borrow £1.3 trillion in the next five years alone.

Our report makes the front page of the Daily Telegraph

Yesterday we gave this report as an exclusive to the Daily Telegraph, where it made the front page twice. Camilla Tominey wrote an excellent piece, as well as producing a highly entertaining podcast with Tim Stanley. We will provide details tomorrow, so that readers can see these for themselves.

Our Chairman’s comments:

“Let’s face it, any person in the street listening to Rachel Reeves making her Budget speech would have come away with the impression she was cutting borrowing and the national debt.

“Her Budget does no such thing. She as good as lied about her infamous ‘black hole’. On top of that, this exposé today from Facts4EU reveals the Budget will have her going to the markets to raise £1.3 TRILLION pounds. Around half of this is additional borrowing and half is needed to replace loans (bonds) coming to maturity. Now that’s something she kept very quiet about.

“How are the markets going to react to a Chancellor spending more and more, with no signs of any restraint, expecting them to double the amount they have been lending? We can see no sign in the accounts of the huge potential cost of the impending increase in interest rates being charged for such a vast sum. Indeed, there is even a question mark over whether the markets will be able to sustain such requests.

“Sir Keir’s fortunes are now inextricably linked with those of Rachel Reeves, with No.10 having backed her at the weekend. We wonder how he’ll feel if he’s shown this report.”

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