How much extra borrowing will the bond market tolerate?

The markets would probably tolerate a rise in borrowing provided it is not too big (perhaps of up to about £15bn or 0.5% of GDP), it is primarily to invest, and it comes alongside a credible commitment to fiscal prudence. A bigger rise in borrowing and a shift away from fiscal restraint risks a sharp rise in bond yields and may mean the government has to back track anyway.

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