The Telegraph has revealed that secret “stress tests” by Treasury officials in recent weeks found that a hike in interest rates from 0.2 per cent to 1 per cent would increase the Government’s borrowing costs by between £30billion and £40billion a year.

Speaking to the newspaper, IEA Economics Fellow Julian Jessop said: “Even if interest rates rose sharply tomorrow, the average maturity of UK government debt is about 15 years, so it will be many years before any increase in debt servicing costs becomes significant.”

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