Andrew Neil warned the UK could face an unexpected increase in interest rates if the British Government and the Bank of England fail to address the risk of rising inflation. Mr Neil said Chancellor Rishi Sunak did not include any protective measure to tackle the potential risk in his latest Budget unveiled on Wednesday. Speaking to LBC, the former BBC host said: "The problem that growth begins to peter out in the middle of the decade is one major big issue that will have to be tackled.

       "think the other one is the rather relaxed attitude of the OBR and of the Bank of England towards inflation.

       "They're saying that the inflation is temporary, that the price spike is temporary and they intend to look through that because it will come back down.

       "They made all these forecasts at a time when the biggest fear was mass unemployment.

       "In fact, that turned out to be totally wrong, we're not entering a period of massive labour shortage."

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       He continued: "So what was not forecast was that these price rises would naturally in a period of labour shortage be baked into pay rises.

       "Even a rise in the national minimum wage. Two-thirds of that will disappear if inflation rises by 4.5 percent.

       "Workers have now bargaining power and the danger now is price rises will be baked in and inflation will come back with a bang and will not be transitory.

       "That will force the Bank of England to increase interest rates and that, in turn, increases the cost of living."

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       Speaking at a Resolution Foundation post-Budget briefing on Thursday, Office for Budget Responsibility (OBR) chairman Richard Hughes warned that the Chancellor's ambitions to cut debt could "easily be wiped" out by lower growth, rising interest rates or further inflation.

       Mr Hughes said the Treasury chief had been able to put about ￡20-25 billion of revenue raised from increased taxes and better-than-expected forecasted growth into getting "debt falling" but argued that Mr Sunak's plans had incorporated only a small margin of error.

       "I would describe (debt) as broadly plateauing," he said.

       "It is falling by 0.6 percent of GDP in the target year, from a level of around above 80 percent of GDP - that is one-sixth of our three-year ahead forecast error for the debt to GDP level.

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       "It could easily be wiped out by 1 percent lower growth in that year, or a 1% increase in interest rates or higher inflation.

       "So it is the narrowest of margins against which to achieve the Chancellor's fiscal objectives, but nonetheless he gets it on a slightly declined trajectory over the medium term."

       Mr Sunak said on Thursday the Government's level of debt was high and while the cost of servicing that was currently low he had to be alert to the risk that that could change.

       "The amount of debt is large, and that's a result of what's happened across over the last 12 months," he told BBC Radio.

       "But ... the cost of servicing that debt currently is actually quite low... and that's because interest rates are at the moment very low."

       "It's one of the risks that I have to protect us against, because if they do rise that will have an impact on the public finances."