Sir Keir Starmer’s plan to borrow an extra £28 billion will cause mortgages to rise by up £2,000 a year, new figures published by the Treasury have claimed.
The Treasury has claimed that every one per cent of GDP additional borrowing – worth around £25billion – will drive interest rates upwards.
In the current economic conditions, the increase in borrowing under Labour’s plans would amount to an increase of between 0.5 and 1.25 per cent of GDP.
A 1.25 per cent rise to the interest rate would amount to £1,920 extra per year, for a household with a £200,000 mortgage over 30 years.
Treasury Chief Secretary Laura Trott warned: “The British economy is turning a corner with inflation at its lowest level in two years, so don’t let Labour ruin it.
Labour said the “only party that has sent borrowing, mortgages and interest rates soaring over the last 13 years is Rishi Sunak’s Conservatives”
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“The cat is well out of the bag.
“Labour’s reckless £28billion-a-year borrowing binge will not only ratchet up debt and send mortgage rates sky high, but will lead to higher taxes for all.”
Buta spokesperson for the Labour Party responded: “The only party that has sent borrowing, mortgages and interest rates soaring over the last 13 years is Rishi Sunak’s Conservatives.
“It was on Rishi Sunak’s watch that national debt soared to the highest levels in 60 years.”
The party said it would borrow £28billion to fund green investment.
But previous analysis by the Tory Party claimed that the move would add as much as £20 billion to the national debt.
The Conservatives said the pledge would result in the party spending more money on debt interest and less money on public services.
The payments would amount to £20.44 billion over the course of one parliament.
That is as much as the entire Home Office budget, with the Tories claiming the total cost is the equivalent of more than 400,000 nurses or 88,000 doctors.
But disputing the figure, the Labour party said they had not yet put forward the yearly breakdown.
A Labour spokesman said: “It was the Conservative Party that crashed the economy and left Britain worse off, with the highest tax burden on record and the highest levels of debt since the 1960s.
“Labour’s plan to get our economy growing will cut bills, create jobs and make working people in all parts of the country better off.
“Labour will ramp up to a total of £28billion a year in the second half of the Parliament.
“We will factor in the Government’s current investment on the green transition into our plans.
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“Labour will introduce a new set of fiscal rules.
“We will not borrow to fund day-to-day spending and we will reduce national debt as a share of the economy over the course of the Parliament.”
Trott, Chief Secretary to the Treasury, claimed Labour is taking the “easy way out by passing on our debts to our children”.
