UK borrowing costs have risen sharply after the recent budget, erasing the fiscal headroom of Chancellor of the Exchequer Rachel Reeves. This has raised concerns about potential tax increases or spending cuts, given the precarious state of the current debt situation.

A senior figure from the UK's fiscal watchdog informed lawmakers that the increase in government borrowing costs has eliminated the buffer against Reeves' fiscal rule, which requires day-to-day spending to be financed through tax revenues. As a result, the UK government may need to reassess its financial plans in light of the higher borrowing costs, which could have significant implications for the country's economic strategy.