Sterling tumbled to its lowest level against the US dollar for over a year this morning as investors heaped more risk premium on UK gilts - the way the state finances its activities.

Economists have warned the rise could mean further tax hikes or spending cuts by the government.

The cost of borrowing for the UK government surged to its highest level for almost 17 years on Wednesday amid a sell-off in the bond market and concerns over the threat of stagflation

The Chancellor has a long-planned trip to China scheduled for this week and Treasury minister Darren Jones described it as ‘important’ to UK trade.

Sterling fell by as much as 1.1% to 1.233 against the dollar, its lowest level since April 2022, while the yield on the benchmark 10-year UK gilt climbed by roughly 12 basis points to a peak of 4.81%