Britain's new finance minister unveils first budget
EWU•Finance minister John Healey set the government’s fiscal headroom at £15 billion, down from £23.6 billion in March. Bond yields edged lower, the FTSE 100 rose 0.1%, and bank shares gained 3.3% to 3.6% after a smaller-than-feared tax increase on profits.
1. Budget headroom falls
John Healey announced a cautious budget plan, setting fiscal headroom at £15 billion ($19.93 billion), in line with expectations from a Reuters poll and below the £23.6 billion recorded in March.
2. Markets move modestly
Britain’s 10-year government bond yield fell 2 basis points to 5.323%, while the 30-year yield slipped 3 basis points to 5.711%. The FTSE 100 rose 0.1% and the domestically focused FTSE 250 gained 0.4%; sterling was down 0.1% against the dollar.
3. Bank shares rise
Lloyds, Barclays and NatWest shares rose between 3.3% and 3.6% after the budget included a smaller-than-feared tax increase on bank profits. Analysts described the market response as muted, while noting that the government’s spending review next year will raise questions about funding.
