From Morningstar: 2024-11-01 05:04:48

Chancellor Rachel Reeves is working to calm markets after her Budget borrowing spree raised concerns. The Budget increased state spending by over £70 billion per year, funded by taxes and borrowing, leading to a rise in government bond yields. Reeves reassured the public of her commitment to economic and fiscal stability, despite warnings from experts about potential tax increases in the future. The International Monetary Fund supported the investment and spending in the budget, but financial markets remained unsettled as interest rates on government borrowing rose. Reeves defended her decision to raise national insurance contributions for employers, acknowledging potential impacts on wage growth. The Office for Budget Responsibility forecasts negative effects on wages and employment due to the NICs increase. Despite a temporary boost to GDP, the OBR predicts downgrades in future years and increased pressure on inflation and interest rates. The NHS received a significant funding increase in the Budget, with a focus on health service improvements. Additionally, Reeves announced an increase in the sugar tax on soft drinks to account for inflation and potential expansion to other types of beverages.



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