Follow Rachel Reeves’ budget as it happens, and all the details of the mistakenly released OBR forecasts, with Graeme Wearden and Andrew Sparrow on our politics live blog:
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Bond investors give budget the thumbs up
By the end of the day, UK bonds had recovered more ground as investors welcomed the UK’s new fiscal outlook.
The news that the chancellar has doubled her budget headroom to over £20bn helped to spark a rally in gilts today.
The 10-year UK bond yield fell by 11 basis points, to 4.42%, while 30-year yields fell by 11bps.
Deutsche Bank analysts have spotted that this was the best Budget day for UK government debt, compared to German and American debt, in almost 20 years!
They report:
At first glance, the gilt market likes what it heard from the Chancellor today.
In fact, benchmarked relative to Bunds and US Treasuries, at the time of writing today marks the largest fall in 10y gilt yields on the day of a UK budget or major fiscal statement since 2006.
Not everyone is happy, though – several gambling firms have warned that the taxes announxed today will hit their profits, and lead to job losses in the sector.
Danni Hewson, AJ Bell head of financial analysis, says:
“Investors were quick to cotton onto the fact that they wouldn’t have to wait for the chancellor to get to her feet to find out exactly what her Budget had in store. Within minutes of the OBR publishing its fiscal outlook early, markets were passing their real-time assessment of what they were reading – weak growth, chunky tax and spend measures, but the much-vaunted fiscal prudence intact.
“There was a brief rally in gilts thanks to better-than-expected fiscal headroom, with yields dropping and prices rising on short and long-term UK government bonds before moving back. The lack of a gilt market sell-off was reassuring, and overall the contents of the Budget struck a broadly positive tone with investors once they’d had time to digest the key facts.
Our Politics Liveblog (where I’ve been moonlighting this afternoon) has all the action:
Goodnight! GW
Here’s everything important that happened during a madcap budget day:
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Jasper Jolly
In the Canary Wharf offices of Saxo UK there is a race to understand the implications of the leaked forecasts – mixed with laughter at the hapless Office for Budget Responsibility.
As well as sterling, there was some movement on UK bond markets after the leak. The yield on the benchmark 10-year gilt – a measure of the cost of government borrowing – dropped quickly from 4.5% to about 4.42%. Yet a few minutes later it was back up above 4.52%.
Will Marsters, a sales trader at Saxo UK, said:
“The initial reaction was to come off yields quite a bit, but once the market digested it, it came back.”
Traders are trying to work out if chancellor Rachel Reeves’s plans seem credible – which would reduce the chance of higher bond yields. Marsters said:
“The tempered growth didn’t seem too optimistic, which eroded some of the risk premium. But now everyone is just trying to digest.”
However, Neil Wilson, investor strategist, said there was an assumption of tighter spending later in the parliament.
“You’re saying we’re going to buy fiscal restraint by the end of the parliament – ‘Don’t worry about welfare – we’ll sort it out.
Updated at 07.55 EST
Follow Rachel Reeves’ budget as it happens, and all the details of the mistakenly released OBR forecasts, with Graeme Wearden and Andrew Sparrow on our politics live blog:
ShareBetting firms’ shares fall on higher taxes
Gambling companies are to face higher taxes, the OBR confirms.
Its accidentally released economic and fiscal outlook says:
Several changes to gambling duties have been announced in the Budget which overall are estimated to raise £1.1 billion by 2029-30. From April 2026 there will be an increase in remote gaming duty from 21 to 40 per cent and abolition of bingo duty from its current 10 per cent rate.
This has hit the share price of betting companies.
Shares in Entain, whose brands include Ladbrokes, Coral and BetMGM, have fallen by 4.44%
Evoke, the firm behind William Hill, 888, and Mr Green, are down 14.5%.
ShareGrowth forecasts cut as OBR downgrades productivity view
The accidentally released OBR report shows that growth will be weaker than previously forecast.
Real GDP is forecast to grow by 1.5% on average over the forecast, 0.3 percentage points slower than projected in March, “due to lower underlying productivity growth”.
The OBR says it has (as expected) lowered its estimate:
We have reduced our central forecast for the underlying rate of productivity growth in the medium term to 1.0 per cent, 0.3 percentage points slower than in our March forecast.
The OBR’s new report has now vanished from its website, replaced with a 404 Not Found error. Presumably it will be back at 1.30pm….
ShareIn the City, OBR report causes excitementJasper Jolly
At the London offices of Saxo UK on Wednesday morning, observers would have been forgiven for forgetting that Rachel Reeves was preparing to announce her second budget – until the apparent accidental early release of the government’s official economic analysis moved the markets.
The value of the pound immediately jumped after the forecasts showed tax rises of £26.1bn by 2029-30, and growth of 1.5% over the next five years.
Sterling rose briefly from $1.3160 to $1.32, as investors scrambled to digest the leak.
Sitting on the 26th floor of a tower in London’s Canary Wharf financial district, Neil Wilson, investor strategist at Saxo UK, said:
It’s not a ginormous move, but in a minute it’s a noticeable spike. It has retraced a bit now.
[the pound’s now slipped back to $1.313]
There was general excitement as the Office for Budget Responsibility, the government’s forecaster, accidentally published its full analysis two hours early.
“Boom! There’s your 200-pager,” said Will Marsters, a sales trader, as the full report was published.
Updated at 07.55 EST
OBR: Child benefit cap ended, personal tax thresholds frozen
Astonishingly, the OBR’s latest Economic and fiscal outlook has indeed been published early on the fiscal watchdog’s site. You can see it here.
The report confirms that the two-child limit is being lifted, at a cost of £3bn, which will the OBR says will increases benefits for 560,000 families by an average of £5,310.
There are also personal tax rises with a combined yield of £15 billion in 2029-30.
The OBR says:
These include: freezing tax thresholds from 2028-29 onwards, which raises £8.0 billion in 2029-30 and contributes to around 780,000 more basic-rate, 920,000 more higher-rate, and 4,000 more additional-rate taxpayers by 2029-30 than in the March forecast; charging National Insurance on salary-sacrificed pension contributions, which raises £4.7 billion; and increasing tax rates on dividends, property and savings income by 2 percentage points, raising £2.1 billion.
ShareUK borrowing costs fall as budget ‘doubles fiscal headroom’
Newsflash: UK borrowing costs are falling, after a flurry of news flashes attributed to the Office for Budget Responsibility.
Reuters are reporting that the UK’s headroom to meet the chancellor’s stability rule has more than doubled!
They are snapping that the current budget surplus margin has risen to £21.7bn in the OBR’s new forecasts, up from the £9.9bn forecast in March.
[This is the target for the current budget to be in balance in 2029-30]
Bond investors had hoped to see an increase in the headroom – and they are piling into UK government bonds, driving down the cost of borrowing. The yield (or interest rate) on 10-year gilts has fallen by 5 basis points (0.05 of a percentage point) to 4.44%.
This is an unusual development – the OBR are meant to release their forecasts when the chancellor sits down, not before she’s even stood up.
Reuters are also snapping that the chancellor’s tax rises will bring in £26bn more – and (as feared) the budget regulator has cut its productivity forecast.
UK OBR ECONOMIC AND FISCAL OUTLOOK: BUDGET TAX RISES RAISE 26.1 BLN STG BY 2029-30
UK OBR: CENTRAL GOVERNMENT NET CASH REQUIREMENT EX NETWORK RAIL 149.2 BLN STG 2025-26
UK OBR: CUTS MEDIUM-TERM PRODUCTIVITY GROWTH FORECAST TO 1.0 PCT FROM 1.3 PCT
UK OBR: FREEZING PERSONAL TAX THRESHOLDS RAISES 8.0 BLN STG IN 2029-30
UK OBR: NICS ON SALARY-SACRIFICE PENSIONS RAISES 4.7 BLN STG IN 2029-30