One cannot describe the reaction in financial markets as rapturous. Gilt yields initially fell, which was helpful for Rachel Reeves, but then they rose. By late afternoon, the yield on the 10-year government debt settled towards the upper end of the day’s range. The move wasn’t huge, but it cost the government slightly more to borrow for 10 years than before the chancellor spoke.
Call that a wait-and-see response. Investors aren’t terrified by the prospect of higher government borrowing but, equally, they can see that the plan to make the UK the fastest-growing economy in the G7 probably isn’t going to be realised during this parliament. Even in 2028-29, on the Office for Budget Responsibility’s forecasts, we’ll still be looking at growth in GDP of a lacklustre 1.6%.
