By Paul Hannon


The U.K. government will stick to its borrowing rules despite a recent rise in borrowing costs, Treasury Chief Rachel Reeves told lawmakers Tuesday.

U.K. government bond yields hit multi-year highs last week, part of a global fall in bond prices amid investor concerns over the slower pace of rate cuts by the U.S. Federal Reserve.

While yields have steadied this week, higher interest payments would make it more difficult for the government to meet its rules, which require that it cover day-to-day spending with tax revenues by the end of this decade, borrowing only to invest.

"I set out our fiscal rules," Reeves said. "We remain committed to those fiscal rules and we will meet them at all times."

Slower-than-expected growth and the prospect of higher interest costs may see the government breach its rules unless it cuts spending or raises taxes, economists say. In response to a lawmaker's question, Reeves declined to rule out spending cuts.

"I'm not going to write five years of budgets," she said.

Reeves has been criticized by opposition lawmakers for proceeding with a planned visit to China as bond yields were rising and the pound was falling.

In response, Reeves said her trip to the world's second largest economy was part of the government's drive to boost growth after a long period of weakness.

"We must go further and faster in driving economic growth," she said. "We're leaving no stone unturned."


Write to Paul Hannon at paul.hannon@wsj.com


(END) Dow Jones Newswires

01-14-25 0911ET