Bond market power: why Rachel Reeves is keen to keep the £2.7tn ‘beast’ onside

This week marks a pivotal moment for the UK government as Chancellor Rachel Reeves prepares to unveil her budget, a critical event that could define her leadership and the Labour party's future. The discussions leading up to the budget have been intense, with significant implications for fiscal policy and economic management. Behind the scenes, Kiran Stacey shares insights from his recent trip to Johannesburg with Keir Starmer, including talks on the Ukraine peace plan.

Deutsche Bank has projected a 6% weakening of the dollar by the end of 2026, attributing this forecast to concerns over the U.S. deficit. The bank's analysis reflects a cautious outlook on the currency's performance amid ongoing economic challenges.

Chancellor Rachel Reeves is set to implement a crackdown on benefit fraud while simultaneously lifting the two-child limit for universal credit, a move expected to cost £3 billion. This initiative aims to generate an additional £1.2 billion in savings as the government addresses rising welfare spending criticisms ahead of the upcoming budget.

The UK is facing a significant jobs crisis, with nearly one million young people classified as Neets—those not in education, employment, or training. Recent data from the Office for National Statistics reveals that this demographic continues to struggle in securing stable employment, exacerbated by the impacts of Covid and the rise of AI technologies.

Chancellor Rachel Reeves is set to unveil her second budget, aiming to address the cost of living crisis by freezing income tax thresholds and rail fares, while proposing a multibillion-pound tax-raising package. This comes as the UK economy faces significant challenges, with a financial gap of approximately £20 billion needing to be addressed.

Deutsche Bank has provided insights on the impact of artificial intelligence (AI) on the economy, emphasizing its role in shaping market dynamics and investment strategies. The bank's analysis reflects a growing recognition of AI's potential to drive economic growth and innovation across various sectors.

The UK government has announced a freeze on rail fares in England for 2026, marking the first such measure in 30 years. Chancellor Rachel Reeves is set to confirm this decision in her upcoming budget speech, aiming to alleviate the financial burden on commuters and support economic growth amid rising living costs.

The upcoming budget announcement by Chancellor Rachel Reeves is viewed as a critical moment for the Labour government, with significant implications for her leadership and the party's future. The chaotic atmosphere leading up to the announcement has raised concerns reminiscent of past budgetary failures, such as those experienced by Gordon Brown and Kwasi Kwarteng.