UK Chancellor avoids a “Truss moment”
by AIB Treasury Economic Research Unit
- The market reaction to this week’s UK Autumn Budget, suggests investor appetite has been tested by the scale of spending planned by the Chancellor in the next few years.
- On the week, UK gilt yields are c.20-30bps higher across the curve, well in excess of moves in other G7 countries.
- Overall, higher capital spending in this Budget raises real government investment by 15% from 2025 to 2029, and this, in particular, has boosted the near term GDP forecasts from the OBR.
- However, it should be noted that UK futures contracts have hardened recently, with fewer rate cuts now priced-in by the end of next year.
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