UK 10-year gilt yields dropped below 5.3%, their lowest level in more than a month, following Finance Minister John Healey’s unveiling of a cautious budget designed to support households under mounting global economic pressures. Healey reaffirmed the government’s adherence to its fiscal rules, outlining tax increases on banks, gambling, savings, and landlords, as well as tighter VAT requirements for online marketplaces and measures to shield households from surging energy costs.
He also confirmed that the government would draw on part of its fiscal buffer—now reduced to £15 billion from a previous estimate of £24 billion—to meet its main fiscal target while continuing efforts to restore the public finances, despite the economic repercussions of the conflict involving Iran. The budget had little impact on market expectations ahead of next week’s Bank of England policy meeting: money markets fully price in a rate rise on November 5, with a second increase anticipated by February.
