UK Markets Absorb Healey Budget as £15 Billion Fiscal Headroom Meets Expectations
Updated
Updated · Reuters · Oct 28
UK Markets Absorb Healey Budget as £15 Billion Fiscal Headroom Meets Expectations
3 articles · Updated · Reuters · Oct 28
Summary
Britain's 10-year gilt yield fell 2 basis points to about 5.32% after John Healey's first budget kept to borrowing rules and left little for investors to reprice.
£15 billion of fiscal headroom, down from £23.6 billion in March but in line with Reuters poll expectations, reassured markets that the government was preserving discipline despite higher nominal borrowing.
Bank shares outperformed after Healey raised the profit surcharge to 6% from 3%—less severe than feared—with Lloyds, Barclays and NatWest up 1.3% to 1.6%.
Sterling slipped 0.1% to $1.3295 and the FTSE 100 edged up 0.1%, while investors welcomed a budget designed to avoid a repeat of the 2022 Liz Truss bond-market turmoil.
Attention now shifts to next week's Bank of England meeting, where policymakers are expected to raise rates by a quarter point to 4% as inflation has climbed to 3.5%.