Sir Charlie Bean, a former OBR official, estimates that the rise in borrowing will add around £20bn to Britain’s debt interest bill by 2027.

This will add to an already growing debt pile and is likely to wipe out Hunt’s £6bn headroom he has to meet a target to get debt falling.

Mortgage pain remains

Higher bond yields will bring a mixed bag for homeowners.

First, it will stop mortgage rates falling any further, says Andrew Wishart at Capital Economics.

But he says the impact on the mortgage market will differ depending on the length of time buyers are fixing their rates.

Because the rise in bond yields has been driven by expectations that interest rates will stay higher for longer, it is long-term yields that have climbed the most.

“As a result, it’s really the five-year swap rate rather than the two-year that has moved more notably,” Mr Wishart said.

Five-year swaps, which flow into the pricing of five-year fixed rates, have jumped to 4.7pc, up from 4.4pc two weeks ago.

“That should push up the interest rates on five-year fixes compared to two-year fixes,” Mr Wishart said.

This will be a particular blow for borrowers because five-year deals were the cheapest deals on the market.

The average two-year fixed rate on Wednesday was 6.46pc, while the average five-year rate was 5.96pc, according to Moneyfacts.