Rishi Sunak: higher interest rates could lift cost of repaying government debt

UK chancellor says effects of low interest rates aren't really understood

Britain's Chancellor of the Exchequer Rishi Sunak at Downing Street. Reuters

British Chancellor of the Exchequer Rishi Sunak on Sunday expressed concern that higher interest rates might one day jack up the cost of servicing government debt.

Government borrowing must be held in check as record low interest rates were not fully understood, he told City AM.

"We should have some humility about saying what we think will happen," Mr Sunak was quoted as saying by The Telegraph.

Interest rates in Britain are at a record low 0.1 per cent.

The minister said he had a duty to manage the public finances in a way that was "sustainable over time".

Mr Sunak unveiled a £4.6 billion ($6.22bn) support package for businesses on Tuesday to soften an expected recession caused by a surge in Covid-19 cases that has led to a third national lockdown.

He has previously announced emergency help for the economy worth £280bn, including a job protection scheme that will run until the end of April.