Chancellor Rachel Reeves faces “difficult decisions” if she wants to meet her self-imposed financial rules after borrowing costs hit their highest level for 16 years, the former deputy governor of the Bank of England has warned.

Reeves has pledged not to borrow to fund day-to-day spending and to get debt falling as a share of national income by the end of this parliament.

Sir John Gieve told the BBC the chancellor faced a choice between raising borrowing, increasing taxes or cutting back on public spending.

Reeves has just arrived in China for a three-day visit aimed at boosting trade and economic ties.

Opposition parties had called for her to cancel the trip after the pound fell to its lowest level in over a year and UK borrowing costs rose, but Culture Secretary Lisa Nandy said it was “absolutely right and proper” that the chancellor went and took seriously the UK’s relationship with China, the world’s second largest economy.

She said the rise in borrowing costs was “a global trend that we’ve seen affecting economies all over the world”.