Closing post
And finally…some measure of UK borrowing costs rose today, but it was a minor move after yesterday’s post-Budget bond rally.
The yield, or interest rate, on 10-year UK gilts has gained 3 basis points (0.03 percentage points) to 4.45%, as City investors have questioned the credibility of the fiscal plans outlined by the chancellor.
Long-dated 30-year gilt yields dipped very slightly, while there was a small rise in short-dated two and five-year bond yields.
But the City is confident that the Bank of England will lower interest rates next month – a December rate cut, from 4% to 3.75%, is seen as a 92% chance tonight.
Rachel Reeves has positioned Labour to fight the next general election with tax increases and spending cuts that resemble a work of “fiscal fiction”, an analysis by leading economists has warned.
In its verdict on the chancellor’s budget, the Institute for Fiscal Studies (IFS) said the chancellor had chosen a high-risk strategy by backloading her plans to start just before voters go the polls in 2029.
Helen Miller, the thinktank’s director, said the budget plans would involve “near-heroic restraint in an election year” and suggested that Labour may ultimately be forced to abandon some of its tax-raising measures or planned spending cuts.
“[It is] a backloaded set of tax rises that almost entirely delay the pain. It’s reminiscent of the fiscal fictions of recent years. I hope this is a government able to deliver on its plans. But I have my doubts,” she said.
A calm day's trading in London
The London stock market has closed, with the blue-chip share index little changed on the day.
The FTSE 100 index has gaind 2.35 points today, or 0.02%, to end at 9693 points.
Housebuilders were among the risers, lifted by hopes of UK interest rate cuts, while banks had another good day after avoiding a windfall tax in yesterday’s budget.
