Rachel Reeves acknowledges damage of 'too many' budget leaks

Chancellor Rachel Reeves criticized unauthorized budget leaks that preceded her significant budget announcement, stating that many were inaccurate. She revealed that her decision to reverse the income tax policy was made in collaboration with Prime Minister Keir Starmer, emphasizing the importance of unity in their approach.

UK gilt yields have seen a slight decrease compared to other major economies, indicating a potential shift in the bond markets as Chancellor Rachel Reeves navigates fiscal challenges. Despite this drop, the UK still faces a significant premium on borrowing costs, with 10-year government gilt yields rising compared to US Treasury bonds and eurozone counterparts since the last general election.

The Institute for Public Policy Research has indicated that the UK may soon see a reduction in the premium it pays to borrow compared to other major countries, as confidence in the government's fiscal strategy grows following Chancellor Rachel Reeves's autumn budget announcement. This budget aims to increase the UK's financial headroom significantly by 2030.

The Bank of England has projected that the recent budget proposed by Chancellor Rachel Reeves will reduce the UK's headline inflation rate by up to half a percentage point next year, with an expected decrease of 0.4 to 0.5 percentage points from mid-2026. This analysis was shared by Clare Lombardelli, a deputy governor at the Bank, following the chancellor's high-stakes tax and spending statement last month.