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.
