The head of the Budget's watchdog tonight warned "the whole system is under stress" - while the Chancellor played down the risk of an economic crisis.
Richard Hughes, chief of the Office for Budget Responsibility (OBR), said "a big rise in interest rates... which has happened worldwide, is just putting the whole system under stress".
Speaking at a Policy Exchange event, he said: "We see it as a stress on the public finances, but it's also happening out there in the wider world, in households and in companies.
"It just underscores what a volatile environment we're all operating within. We've seen a series of shocks in the pandemic with the energy crisis, now the normalisation of interest rates is putting the system under stress once again."
He added: "Charters don't get much of a break these days when moving from the last set of challenges onto the next and that's one of the things which has driven up public spending and it's one of the reasons driven up the level of debt because you've just got to cope with shock after shock and have to respond."
Despite his bleak analysis, Jeremy Hunt said the UK is in a better position than it was during the 2008 financial crash with a "resilience that there wasn't back then".
He insisted the Government “stands ready” to take action if there is instability in global markets.
The Chancellor added: “I think we have to recognise that we are undergoing a period of change as we move from a period of extremely low interest rates to a period of higher interest rates.
“And that is causing, globally, adjustments that have to be made and we have to remain vigilant.”
It comes as Credit Suisse was bought by UBS in a rescue takeover amid fears it was going to collapse and trigger a banking crisis.
Mr Hunt said he "wholly supported" the decisions that led to the takeover.
The Chancellor was speaking this afternoon at a grilling by the Lords Economics Affairs Committee on his Spring Budget announcement last week.
He was interrogated on the abolition of the £1million pension lifetime allowance .
Mr Hunt failed to provide a specific number of how many extra doctors the workforce would have as a result of the policy - which is claimed will deter people from retiring early.
The OBR was created in 2010 to provide independent and authoritative analysis of the UK’s public finances.
It produces detailed five-year forecasts for the economy and public finances twice a year. The forecasts accompany the Budget.
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