British markets take Healey's first budget in their stride
EWU•British stocks, bonds and the pound barely moved after finance minister John Healey pledged to follow fiscal rules, with budget headroom at £15 billion, down from £23.6 billion in March.
1. Markets barely react
Britain's 10-year government bond yield fell 2 basis points to 5.323%, while the 30-year yield fell 3 basis points to 5.711%. The pound slipped 0.1% against the dollar to $1.3298 and 0.1% against the euro to 83.72 pence. The FTSE 100 rose 0.1% and the domestically focused FTSE 250 gained 0.4%.
2. Smaller fiscal cushion
Healey said budget headroom under the government's fiscal rules was £15 billion, in line with expectations but below the £23.6 billion recorded in March. The smaller cushion reflected rising energy prices and borrowing costs. Britain's biggest lenders welcomed a smaller-than-feared tax increase, as the surcharge on bank profits above a set threshold rose from 3% to 6%.
