Rachel Reeves was warned the economy could enter a “doomed loop” after borrowing surged to a new high in a fresh blow to the Chancellor. The Treasury borrowed £17.8 billion in December, the highest level for four years and £10 billion more than the same month last year.

Borrowing - the difference between spending and tax revenue - was £17.8bn last month, putting more pressure on the chancellor.

It comes as Rachel Reeves insisted she would not resign despite a wave of criticism over decisions such as the National Insurance increase, inheritance tax on family farms and winter fuel payment means-testing, as well as poor economic growth with the economy growing by just 0.1% in November.

UK borrowing costs rose unexpectedly to £17.8billion in December, but Chancellor Rachel Reeves remains confident in the country's financial health following the October budget. This figure was around 25 per cent higher than what economists had predicted and was £10.