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- This Budget is set against an uncertain economic backdrop so far this year. GDP growth was robust in the early part of the year, but has since moderated.
- The Chancellor had committed to not raising taxes materially further following last year’s hikes to national insurance (NI) on employer contributions, which among other measures raised £40bn.
- While the tax rises are largely to fill the hole in the fiscal rules, there are also net spending increases in the budget.
- With the OBR report published early in error, the initial market reaction saw a rally in gilt markets, with the 10-year yield falling c.8bp briefly from 4.5% to 4.42%.
- The tax hikes are expected dampen GDP growth, albeit they are back-loaded.
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