Rachel Reeves today launched a fierce defence of both her budget and her recent trip to China and insisted that growing the economy was the government’s “number one mission”.

However, she indicated that she is prepared to make emergency spending cuts to control public finances.

The Chancellor addressed MPs in the Commons amid a growing clamour for measures to calm the markets after government borrowing costs surged and sterling fell, throwing her spending plans, outlined in the budget, into chaos.

Ms Reeves reminded MPs that the same conditions were affecting other countries, including the US and Germany.

“We have seen global economic uncertainty play out in the last week. But leadership is not about ducking these challenges, it is about rising to them,” she said.

“The economic headwinds that we face are a reminder that we should – indeed, we must – go further and faster in our plan to kickstart economic growth.”

Shadow Chancellor Mel Stride accused the Chancellor of jetting off to China and “ducking” his urgent question last week.

He noted that the pound had hit a 14-month low and borrowing costs were at a 27-year high, adding that business confidence has “fallen through the floor”.

Mr Stride said: “This is a crisis made in Downing Street,” a comment that prompted laughter on the Labour benches where Ms Reeves was flanked by the deputy prime minister Angela Rayner, Treasury Minister Darren Jones and the Business Secretary Jonathan Reynolds.

“When the Government was losing control of the economy, where was the Chancellor?” asked Mr Stride, calling her Beijing trip a “Peking duck”.

Stating that her trip to China had yielded £600m of benefits for businesses who had welcomed closer ties, Ms Reeves said: “As far as I can tell, the Conservatives’ economic strategy is that the UK should not engage with the second largest economy in the world.”

She said the new agreements with China will help the UK government improve the lives of working people.

The debate, and market reaction, will now run on into next week at the World Economic Forum in Davos, ahead of the new forecast by the Office for Budget Responsibility in March.

Today’s exchanges took place as the yield on 30-year gilts – debt that is due for repayment in 30 years – was 5.42%, close to its highest since 1998.

The yield on 10-year gilts was 4.87%, close to the highest since the 2008 financial crash.

Since Ms Reeves’ Budget in October, 30-year gilt yields have risen by around 60 basis points, or 0.6 percentage points.

It is estimated that increase in UK market borrowing costs, if sustained, could add around £10bn to the government’s annual debt interest bill by the end of the Parliament in 2029-30, which would wipe out the Chancellor’s £10bn headroom against her chosen fiscal rules.

Grangemouth pledge

Ms Reeves was questioned by Labour MP Brian Leishman, member for Alloa and Grangemouth, about the future of the Grangemouth oil refinery which is part owned by a Chinese company.

He asked if the Chancellor has spoken about it during her visit to China and, if not, whether she would do so.

Ms Reeves replied: “We are working closely with the Scottish government to ensure there is a bright future for the people of Grangemouth because de-industrialisation should not be the future for communities including in Scotland.”