Governments generally spend more than they raise in tax so they borrow money to fill the gap, usually by selling bonds to investors. As well as eventually paying back the value of the bond, governments pay interest at regular intervals so investors receive a stream of future payments.

Britain's government borrowing costs have leapt this week, adding to the challenges facing finance minister Rachel Reeves who is planning to sell hundreds of billions of pounds' worth of bonds this year to fund public services and growth-boosting investments.

The pound has fallen to its lowest level in over a year, as UK borrowing costs surge to their highest in 16 years, fueling concerns over public finances and the economy.