New UK finance minister unveils 'steady as you go' budget
EWU•John Healey announced a cautious UK budget, with £15 billion of fiscal headroom and support measures for households and businesses. UK bank shares rose 3.3% to 3.6% after a smaller-than-feared tax increase on bank profits.
1. Budget and headroom
Healey said the government had £15 billion of headroom under its fiscal rules, down from £23.6 billion in March. The budget included household and business support measures, including a £100 energy payment, extended electricity VAT relief and fuel-duty support.
2. Market reaction
The 10-year UK government bond yield fell 2 basis points to 5.323%, while the 30-year yield fell 3 basis points to 5.711%. The FTSE 100 rose 0.1% and the domestically focused FTSE 250 gained 0.4%; Lloyds, Barclays and NatWest shares rose between 3.3% and 3.6% after the bank tax increase came in below expectations.
3. Outlook and concerns
One market strategist described the budget as reassuringly dull, while analysts highlighted a cut in next year's growth forecast from 1.6% to 1% and continuing uncertainty over future spending decisions.
