PARLIAMENTARY WRITTEN QUESTION
Public Sector Net Cash Requirement: Interest Rates (27 November 2023)

Responsible decisions on borrowing are a key pillar of government support to the MPC in its action to bring inflation down to the 2% target. The external evidence suggests that for every extra 1% of GDP of borrowing (£25 billion), we could potentially be pushing up interest rates by as much as half a per cent. And there are reasons to believe that in current conditions it could be higher than that. Treasury modelling suggests that in the current economic conditions the impact might be between 0.5 and 1.25 per cent, without taking into account any supply-side impacts on the economy.

More detail on the methodology can be found here : Further detail on HMT analysis of borrowing and interest rates - GOV.UK (www.gov.uk)