Council leaders have warned Norfolk infrastructure projects could have to be scrapped because rising interest rates means borrowing millions of pounds to build them is becoming too expensive.
Conservative-controlled Norfolk County Council has borrowed £377m over the past five years for major projects, such as the building of new schools and road schemes.
But, with interest rates rising, the senior councillor with responsibility for County Hall's coffers said the authority will need to limit its borrowing in the years ahead.
READ MORE: New Norfolk homes money could see schools miss out on cash
The Bank of England last month raised interest rates to a 15-year high of 5pc, with economists predicting further hikes to 6pc by the end of the year.
Andrew Jamieson, the council's cabinet member for finances, warned it could mean that some capital projects - those where new facilities are built or improvements made to existing assets - do not happen.
Mr Jamieson told a meeting of the council's cabinet: "We borrowed approximately £377m over the past five years at an average rate of just 2pc.
"This was fixed for up to 50 years and it was the correct approach, as it has enabled us to invest whilst rates were low.
"Planning for capital expenditure has been based upon an era of low interest rates and we now need to consider how to respond to a new paradigm."
"This response will include stopping adding significantly to overall debt, deferring expenditure to when rates are forecast to fall and, where appropriate, considering removing schemes altogether."
READ MORE: Council's borrowing set to top £1bn within four years
Mr Jamieson said the plan to borrow up to £65m for capital expenditure in 2023/24 would remain, but in subsequent years he would limit it to a maximum of £50m.
READ MORE: Norfolk County Council needs to plug £42.6m budget gap
If the government agrees to the controversial Norwich Western Link project and agrees to pay 85pc of the £251m cost, the council faces having to borrow millions to cover the rest of the cost.
Some £5m has been set aside in the council's reserves to go towards that project, which would connect the Northern Distributor Road to the A47 west of Norwich.
ANALYSIS: GOALPOSTS HAVE MOVED
These are difficult times for many people. Inflation has pushed up the prices of our grocery shops and rising interest rates are having a knock-on effect on mortgages.
But this is also having an impact on the local councils which are supposed to use taxpayers' money to provide us with the services which we need.
Andrew Jamieson, Norfolk County Council's cabinet member for finance, gave an indication of the way the authority will be affected by interest rates fluctuations when he warned borrowing could have to be curtailed.
The county council has come in for criticism of the amount of money it has borrowed in the past.
The authority has borrowed close to £850m - and is paying annual interest of £31.4m as a result.
Some £377m of that total has been borrowed over the past five years.
Mr Jamieson says it was the right thing to do, as interest rates were low and were fixed for up to 50 years.
But the goalposts have now moved. The council can no longer borrow money at such low rates and Mr Jamieson says that means the days of borrowing significant sums looks to be over.
He is limiting how much can be borrowed in forthcoming years and has warned it could mean capital projects - those where new facilities are built or improvements made to existing assets - could have to be scrapped.
These are schemes such as schools, both new ones and extensions to ones already built, new roads and maintenance of existing roads and replacement recycling centres.
Other capital projects include traffic improvements, care homes and new housing. Take away the council's ability to borrow millions of pounds and much is in doubt.
And Mr Jamieson's remarks come at a time when the Local Government Association, which represents councils, warns authorities are facing a £3bn funding gap, just to maintain existing levels of service amid the impacts of inflation.
The association says councils could be forced to make cuts or raid financial reserves to balance their books.
What is clear is that the government's policy of just giving councils one-year funding settlements needs to change.
That is no way for councils to be able to plan their spending on services, which are vital for so many in this county.
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