Banks and firms to pay extra bills to boost economy

If you put more money into the pockets of consumers and companies, the economy will grow, as per the Chancellor and Prime Minister's guiding star.

The City of London insiders said that the tax cuts would make economic growth harder to achieve, and the tax cuts may make this case more difficult to achieve.

The Bank of England has been under pressure to raise interest rates faster than originally contemplated due to the unexpectedly large 45 billion cut to existing and proposed tax rates.

Markets were expecting the Bank to raise interest rates from 2.25% to 4% next year. The bank rate is expected to hit nearly 6% in May of next year, after Friday's not-so mini-budget.

Companies don't get to borrow at that rate, they pay extra on top for the perceived risk they won't be able to pay back.

If you were to borrow 5 years in the market today, Marks and Spencer would have to pay 10% or more.

Very few companies are going to borrow money to invest in their business - build a factory, hire more people, expand research and development - at rates that are high.

They are likely to try and reduce the debt that they already have by not renewing loans as they come to the end of their term, reducing their spending and investment power.

One bond trader said that the additional risk associated with the UK means that UK companies will be charged extra premiums for their borrowing compared to last week, which is counter to the growth agenda of the government. It may be that the markets will settle down, look at the government's other reforms and cuts to regulation promised in the coming weeks and months, and decide how the government's plan for growth can work.

The UK and the companies that call it home have lost credibility in the eyes of lenders, as things stand.

The potential boost to the incomes of consumers and businesses that have been affected by the proposed corporation tax rates is more than offset by the increase in borrowing costs by a margin that is more than offset by the increase in borrowing costs.