Last week’s Budget has fully vindicated the banner that ran above the splash headline: ‘PM urges voters not to give Labour a blank cheque for tax hikes’

 The outgoing PM was presented with a framed copy of the Mail on Sunday – which was vindicated by Rachel Reeves this week

Kemi Badenoch stands to make a speech after winning the Conservative Party leadership contest

Despite extensive efforts by Ms Reeves’ aides to manage the market reaction, pre-briefing the ‘difficult decisions’ she needed to take to fill the ‘black hole’ allegedly left in the public finances by the Tories, the City took fright and hiked the cost of lending to the Government.

Financiers were particularly unimpressed by the £23billion she committed to an unreformed NHS, coming on top of the billions spent to settle the train drivers’ strikes. According to one analysis, the spike in borrowing costs wiped out the Treasury’s ‘fiscal headroom’ at a stroke.

Despite a chorus of raspberries from businesses – and farmers blindsided by the introduction of inheritance tax for property worth more than £1million – Ms Reeves is determined not to be forced into any embarrassing U-turns, such as that performed by George Osborne over his tax on Cornish pasties.

Chief Secretary to the Treasury Darren Jones has led the fightback by trying to brush off the market reaction as a sign of ‘PTSD from Liz Truss’.

Mr Jones has his fingerprints all over the scene of the crime: he was there in Downing Street on Tuesday, eating pizzas with the Prime Minister and Ms Reeves as the final hours ticked down to Wednesday’s statement.

Ms Reeves herself went on what was described as a ‘victory lap’ afterwards, signing copies of the first Budget to be delivered by a woman at a meeting of the Parliamentary Labour Party that evening.

The vindicated Rishi Sunak appearing at his last ever Prime Minister’s Questions in the House of Commons

The Mail on Sunday banner before the election read: ‘Rishi warning: Starmer will wreck Britain in just 100 days’

The Chancellor – wearing a necklace of a ‘Red Box’ found in a knick-knack shop by a friend – scribbled a dedication on the red book for backbenchers, who joked about how her penny-off-a-pint cut to draught beer duty would ‘save certain MPs a grand a year’.

Publicans facing rising staffing costs due to the hike in employers’ National Insurance rates were not joining in the laughter: they estimate that it could add as much as 20p to each pint.

Behind the fixed smiles, many Labour MPs – already facing a backlash over the cut to winter fuel payments for pensioners – are concerned about the long-term impact on their electoral chances when the full effects become apparent. ‘How does it fit with the growth agenda?’ said one.

And behind the scenes, another fight is brewing. While Ms Reeves was grabbing headlines with her cash boosts for the NHS, transport and schools, buried in the small print was an attempt by her to rein in her Cabinet colleagues.

In the section on Public Sector Pay awards it says: ‘Above-inflation pay awards are only affordable if they can be funded from improved productivity.’

Reeves’ allies are keen to flag that this had been added as a statement of intent from No11.

A source said: ‘This is essentially the Treasury clamping down on inflation-busting pay deals. It is purposefully written quite strongly – it shows our seriousness over keeping control over our finances.’

The fact that Scotland Secretary Ian Murray is refusing to work from his Whitehall office in a show of support for striking staff who work in the building suggests that the message has not been absorbed. It meant he skipped an event with the Confederation of British Industry he was supposed to be hosting.

Given that the Government has already caved in to the train drivers and junior doctors with inflation-busting pay demands, it will be seen as a loud slamming of the stable door.

The financiers are certainly not impressed.

As one City figure said: ‘I’m not buying up Government debt for them just so that they can hand out pay rises to Aslef.’