Rachel Reeves told to ‘get a grip’ by former Head of the Treasury as pound suffers biggest fall in months

Lord Terry Burns made the remarks after the pound suffered its biggest single-day fall in months, as the cost of 30-year government borrowing reached its highest rate since 1998.

It comes as worries mount over the UK’s finances, with Ms Reeves looking to fill an estimated £51 billion black hole in her upcoming autumn budget.

But Lord Burns was unnerved by the latest worrying economic news, telling LBC’s Andrew Marr: “It had been on the cards for some time”.

“We’re not the only country who is in this position. France are in trouble, too. Europe as a whole is suffering from slow growth and that is why we’re not generating the tax revenue that is needed to fund the expenditure.”

Lord Burns, who was Head of the Treasury from 1980 to 1991, also called on the Chancellor to “announce a clear plan” for economic recovery, amid rumours she will be forced to hike taxes and slash spending to balance the books.

The leading British economist said the “persistent stories” about Ms Reeves potential budget plans were “not helpful”.

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He added: “I think it is most unhelpful too, if one starts to, on spending issues, one makes proposals that you can’t carry through.

“So the next time there are serious spending proposals, they have to make sure that they have been well founded, and people are prepared and they can see why it is that they’re necessary.”

The yield on UK government bonds – also known as gilts – jumped to the highest level since 1998, at 5.698 per cent, meaning it costs more for the Government to borrow from financial markets.

Gilt yields move counter to the value of the bonds, meaning prices fall when yields rise.

The pound tumbled as the bond sell-off intensified, with sterling down 1 per cent to 1.34 US dollars and 0.6 per cent lower at 1.15 euros.

The higher gilt yields compound the Government’s woes, increasing the cost of servicing the national debt.

Government bonds have also been under pressure globally, with yields rising across the United States and Europe.

Despite the fall, the value of the pound remains higher than it was for much of the year. In early September 2024, one pound bought $1.31.

It comes as Sir Keir Starmer reshuffled his Downing Street team in a move designed to boost the Government’s economic firepower ahead of the autumn budget, prompting suggestion that Ms Reeves’s role has been diminished.

But Home Secretary Yvette Cooper denied that the Chancellor had been “sidelined”, insisting the situation was “quite the reverse”.

She said: “I think the Prime Minister and the Chancellor have always worked extremely closely together and continue to do so.”