Labour's green borrowing plans could add almost £2,000 to the average mortgage

Rachel Reeves, the shadow chancellor, previously said the Labor government would not immediately meet its £28 billion commitment. Photo: Stefan Rousseau/PA

Labour's plan to borrow billions of pounds to fund its flagship green jobs policy would add almost £2,000 to the average mortgage, the Treasury said.

The department has calculated that for every additional 1 percent of GDP borrowing (equivalent to £25 billion), interest rates could rise by as much as 1.25 percent, resulting in additional costs for homeowners.

A Treasury source said: a £200,000 mortgage over a 30-year term will cost £1,920 more per year as a result of the increase.

Source said: bag. Labour's reckless £28bn plan will not only increase debt and send mortgage rates through the roof, but will inevitably lead to higher taxes for everyone.

“Make no doubt that working families will pay the price of Labour's policies . inflationary borrowing rampant.

“The British economy is about to turn the corner, with inflation at its lowest level in two years, so don’t let Labor ruin it.”

However, Labor responded to this statement by saying that it was the Conservatives who mismanaged the economy and raised prices for households.

The party leadership softened the promise

A party spokesman said: «The only party that has seen borrowing, mortgages and interest rates rise over the past 13 years has been Rishi Sunak's Conservatives.

«It was under Rishi Sunak that the national debt soared to its highest level in 60 years. and earlier this week he was caught misleading the public with claims that he had made [him] redundant.”

Earlier this week, the Prime Minister was criticized by the statistics office after he repeatedly said public sector debt was falling.

Although debt reduction is one of five priorities set by Mr Sunak in earlier this year, the Office for Budget Responsibility forecast it would rise to 93.2 percent of GDP in 2026-27.

Sir Keir Starmer, leader of the Labor Party, announced a £28 billion Green Prosperity Plan in 2021, which he said would create a million high-quality jobs and deliver a net-zero electricity grid by 2030.

However, the party leadership has since watered down that promise, prompting critics to warn that the flagship policy is now is in doubt.

In June, Rachel Reeves, the shadow chancellor, said the Labor government would not meet the £28 billion commitment immediately and would instead «step up» investment in the green economy, aiming to reach the full amount in the second half at the earliest. his term of office.