Rachel Reeves never tires of blaming the former Tory prime minister Liz Truss for ‘crashing’ the British economy.

If anyone dares mention the Chancellor’s own failings – and the foolhardy consequences of her high tax and high spending agenda – they are greeted with finger-jabbing fury.

But Reeves’s attempt to lay the parlous state of our public finances at Truss’s door have just come back to bite her with a vengeance.

For the bond markets – which famously rejected the 2022 mini-Budget and destroyed Truss’s brief tenure in Downing Street – have just delivered a still more damning verdict on our hapless Chancellor.

On Tuesday, traders sent the cost of Government borrowing to 5.79 per cent, the highest level since 1998 – and far beyond anything seen during the Truss conniption.

There is no more sensitive measure of a nation’s financial performance and political competence than the price a government has to pay those willing to lend it money.

So this latest hike is a clear sign that global investors and City dealmakers have lost all confidence in the ability of Sir Keir Starmer and Rachel Reeves to bring stability to an economy mired in inflation, stumbling growth and a growing budgetary nightmare.

Last month, the International Monetary Fund warned Reeves that she has reached the very limit of the taxes she can impose. There is no more juice to be squeezed from the lemon.

Now, the bond markets have issued an ultimatum of their own: if Reeves wants to borrow from them in future, the Chancellor and her Labour colleagues will have to get their house in order. And that means facing down their own backbenchers and spending considerably less, on welfare in particular.

The stakes could hardly be higher. With growth almost non-existent and inflation forecast to rise to four per cent by the end of the year, Britain’s economy is not just sick but in the danger zone.

Our economy has a case of high blood pressure which could easily tip into a massive, debilitating stroke – and there is a terrible risk the patient is about to decline still further.

In normal circumstances, financiers would take little notice of local council elections, which tend to be dominated by rubbish collections and potholes.

Today, however, a number of key financiers – including hedge fund managers, overseas investors in government bonds and City traders – now see things very differently.

That’s because the local elections will amount to a referendum on Labour’s appalling record of socialist decision-making and the terrible consequences for businesses and those they employ.

And it will expose some very uncomfortable facts:

•  That Labour has lumbered Britain with £75billion of new taxes since it came to office.

•  That Reeves has killed business confidence, is closing the nation’s pubs, crushing enterprise and endeavour, and causing battalions of entrepreneurs to flee abroad.

• That the Government has no grip on the cost-of-living crisis, now exacerbated by two months of conflict in the Gulf.

• And that, beneath it all, Reeves has no power to cut a bloated, ever-expanding welfare budget which – incredibly – now exceeds the total amount the Treasury receives from income tax.

It’s no wonder the voters, and – just as importantly –the bond markets are frightened to death because, bad as Starmer and Reeves may be, the alternatives are potentially disastrous.

If the Lib Dems are hopeless, the very real prospect of the far-Left Greens hoovering up council seats points to political and economic chaos. Then there are those threatening to replace Keir Starmer. If the results of today’s vote allow the likes of Andy Burnham or Angela Rayner to march into Downing Street, it is hard to comprehend the scale of the impending mayhem.

Burnham’s most memorable economic quote so far has been to declare: ‘We’ve got to get beyond this thing of being in hock to the bond market.’

Childish and naive, it demonstrates a profound ignorance of Britain’s dire economic situation. For an apparently serious politician such as Burnham to be so glib about the public finances is inexplicable.

Just consider the scale of what we face. In 2025-26, the Government needs to borrow £275.3billion, almost all of which must be raised on the bond market. The more the UK borrows, the higher the interest rate it must pay.

The latest numbers suggest that the nation will spend a staggering £107billion on such borrowing costs this year. That’s more than the £90billion scheduled to be spent on the defence of the realm.

As for Rayner, a powerful advocate for the unions, she has already played her own inglorious part in the problems that we face.

It is her Employment Rights Act that has done so much to cripple part-time working and destroy opportunities for young people.

Leaked memos from her time as deputy leader give a flavour of what we can expect if she gets into No 10: almost every tax increase she proposed was an arrow aimed at wealth creation, aspiration, entrepreneurship and business. The very things that keep our nation afloat.

Meanwhile, her own muddled tax affairs – the unresolved issue of £40,000 of stamp duty on her luxury flat in Hove, East Sussex – place questions over her fitness for public office.

Of course, the crisis that is enveloping the world cannot be placed at Britain’s door. Like other nations, we face an approaching tsunami of factors beyond our control. Reeves is not to blame for Russia’s invasion of Ukraine, war in the Middle East, or the resulting energy shocks.

Yet, as one of the advanced G7 nations, we are among the least well prepared. The scale of our national debt, standing at close to 100 per cent of economic output, means the Government has perilously little wriggle room.

We remain dangerously dependent on expensive imported gas and, under Labour, we are spending lavishly. These things, together with Britain’s growing reputation for political instability, are among the key reasons why Britain is having to pay two percentage points more than Germany to borrow.

The effects will soon be all too obvious.

Given the inflation shock now baked in to the world economy, there is no way the Bank of England will be able to hold its key bank rate at 3.75 per cent for much longer.

Higher interest rates don’t just punish governments but destroy the willingness of business to invest, kill consumer confidence and deliver a profound blow to millions of people climbing the housing ladder or refinancing existing mortgages. Yet our complacent Government is oblivious to the gravity of the catastrophe it faces.

We have been here before, of course. Labour governments in the 1970s – and since – have come into office promising a bright new future (the ‘white heat of technology’, anyone?), reform of public services and growth. Instead, they delivered bloated welfare budgets and crushing blows to commerce.

The bond markets have delivered their verdict; today, the voters will do the same.

The question is: who, if anyone, can possibly get us out of this mess?