Economists warn budget built on ‘shaky foundations’; December UK interest rate cut looks more likely – as it happened

4.40pm GMT 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. Related: Budget tax rises may be ‘fiscal fiction’ as pain delayed for election year, IFS warns 4.37pm GMT 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. 4.10pm GMT Consultancy Oxford Economics has also warned that the budget has not restored the UK’s fiscal credibility. They fear that this could lead to a ‘slow burn’ increase in long-term borrowing costs, and a weaker currency: Despite expectations of a large consolidation, the backloaded nature of the measures and lack of spending restraint means questions around the UK’s long term fiscal credibility will continue. We anticipate a slow burn rise in term premia and a falling pound. That could be precipitated at any moment by fiscal slippage, unmet expectations for productivity improvement, or faltering growth, leading to a rolling confidence crisis in UK safe assets and sterling. 3.14pm GMT UK retailers are urging the government to move faster to close a loophole used by low-cost platforms such as Shein and Temu. In the budget, Rachel Reeves said the UK would end a customs waiver on parcels worth less than £135. The chance is expected by March 2029. But Helen Dickinson, chief executive of the British Retail Consortium trade body, said the proposed time frame is “simply too long”, adding: “Businesses cannot afford any delay.” 2.21pm GMT Rothermere Continuation Holdings put on CreditWatch over Telegraph takeover Away from the budget, lenders have been warned that the parent company of the Daily Mail’s lack of financial scale means it would face a downgrade if it looked to take on a significant amount of debt to fund its £500m takeover of the Telegraph titles, according to a note by S&P Global Ratings. The US credit ratings agency said that Rothermere Continuation Holdings Ltd (RCHL) - the Jersey-based parent company of Lord Rothermere’s assets including the Daily Mail, Mail on Sunday, Metro and The i Paper - has been put on “CreditWatch” as it seeks to put a funding package in place to table a formal deal in the coming weeks. S&P analysts said in the note: “The detail and funding of the transaction remain unclear but, in our view RCHL has limited headroom under our BB- long-term issuer credit rating to accommodate any additional financial debt, considering its limited size and the fact that Telegraph Media Group (TMG) operates in structurally challenged newsprint and advertising markets.” The note said that given the significant valuation of TMG at £500m, compared with RCHL’s “modest size and scale”, S&P believes that the transaction might “materially increase its adjusted leverage beyond our threshold”. On Saturday, Lord Rothermere’s Daily Mail & General Trust (DMGT) announced a £500m deal with RedBird IMI to buy the Telegraph titles. Related: Daily Mail owner strikes £500m deal to buy Telegraph titles The two parties have entered a period of exclusivity and aim to complete the terms of the transaction swiftly, however there is significant speculation over how Rothermere will fund the deal. Most analysts believe that the Telegraph titles are worth around £350m, and DMGT has said that in order to comply with foreign state influence rules there will be no foreign state investment or capital in its funding structure. However, some observers have speculated that this could still leave open the possibility of funding from foreign sources that are not state-owned or sovereign wealth funds. Two years ago DMGT had been in talks with Qatari investors about backing a bid for the Telegraph group, but later decided against the initiative. Rothermere’s businesses, which also include a Middle East-based events operation and property information services in the UK and US, made £1.1bn in revenues and adjusted pre-tax profits of £78m in the year to 30 September. The consumer media business made revenues of £613m and £53m in adjusted operating profit. The property information division, which includes Trepp in the US and Landmark and Yopa in the UK, reported £219m in revenues and adjusted operating profits of £22m. And the events and exhibition arm - four of the five biggest are held Abu Dhabi, Dubai, Saudi Arabia and Egypt - saw revenues increase 67% year-on-year to £272m as adjusted operating profits more than doubled to £42m. Last month, DMGT announced a reorganisation to create a new parent company, RCHL, a move that effectively split DMGT and the non-UK subsidiaries. RCHL is controlled by a discretionary trust which is held for the benefit of Rothermere and his immediate family. 1.56pm GMT With the budget out of the way, Berenberg bank are confident the UK stock market will rally again next year. They are today predicting double-digit UK equity returns over the next 12 months, partly driven by a return to modest growth in earnings-per-share, They caution that it was a ‘mixed bag’ of a budget, though: The hope of Rachel Reeves’ first budget had been replaced by uncertainty, rumours of late changes and a historic leak for her second budget; this has been another budget long of tax hikes and spending and short of spending cuts. Bond markets are giving the UK Chancellor the benefit of the doubt for now but remain fragile, they add. 1.34pm GMT JP Morgan’s head of European rates strategy research has also questioned whether those pre-election tax rises will actually happen. “The near-term uncertainty around the budget and what the budget could have delivered in terms of the gilt market has been removed because headroom is bigger,” Francis Diamond told Reuters, adding this would mean fiscal policy would be less sensitive to swings in borrowing costs next year. Diamond added: “Over the medium term, I think there is always a difficulty... as you approach the 2029 election, whether those tax raising policies are delivering what they need to deliver.” 1.13pm GMT These charts from the Institute of Fiscal Studies today show how the longer freeze on income tax thresholds mean more people will be dragged into become higher rate taxpayers…. By 2029–30, it's expected that a quarter of employees will pay higher or additional rate income tax. pic.twitter.com/HRo3dUgvQc— Institute for Fiscal Studies (@TheIFS) November 27, 2025 …. which this shows the short-term and long-term impact on households across the income scale: Next year households will see gains from additional energy bill support and the effects of removing the two-child limit.But by 2029–30, the big tax rises will have kicked in, particularly hitting middle and higher-income households. pic.twitter.com/TibpTLU2oR— Institute for Fiscal Studies (@TheIFS) November 27, 2025 12.35pm GMT Analyst: Budget calm masks doubts over £26bn tax plan Athough the financial markets remain calm after the budget, there is certainly the sound of scepticism about whether the fiscal tightening (tax rises) outlined yesterday will actually happen. Although investors welcomed the doubling of the chancellor’s fiscal rule headroom, thanks to £26bn of tax rises, the fact those moves are ‘back-loaded’ raises questions about the credibility of the plan [as flagged at 10.56am]. Reminder: Reeves is now on track to hit her target of a balanced current account in 2029-30 with a margin of £22bn. But as 2029 is the latest the next election can happen, there could be pressure on Downing Street to delay the measures. Antonio Ruggiero, FX & Macro Strategist at foreign exchange firm Convera, explains: One key takeaway is that many of the policies announced are back‑loaded, meaning they will not be implemented for several years. This undermines the predictability that markets crave – a more welcome approach would have been to bring more of the fiscal pain forward into 2026. Early implementation builds credibility, reduces the risk of policy U‑turns (of which we have seen plenty this year), and crucially brings revenue in faster. What complicates this dynamic is Reeves’s reliance on a large number of small policy fixes: about 88 measures announced yesterday, compared with an average of 57 at fiscal events over the past decade. That complexity, combined with the back‑loaded implementation, raises questions about the reliability of the £26bn in planned tax revenues she aims to collect. Yet markets appeared calm: sterling traded higher while gilt yields fell. The larger‑than‑expected headroom was clearly well received. Recall that it was revealed before Reeves even presented her plan, creating a cushion that reassured investors and effectively raised their tolerance threshold for policies they might have otherwise disliked from the outset. 12.34pm GMT Halfords reports rise in bike sales Halfords has seen an increase in sales of bicycles for the first time since 2022 as the warm summer got the UK peddling again. Henry Birch, the chief executive of the cycles and car parts retailer which also operates car servicing centres, said sales of cycles and related kit rose 9% in the six months to 26 September with increases from all aspects of the market, from ebikes and expensive road bikes to children’s wheels. He said Halfords had been winning market share helped by a number of factors, including more affordable ebikes, as the industry had recovered from a pandemicboom which turned to a slump. “We are now on a more even keel,” he said. “This is not just a middle class mamil boom,” referring to the trend for certain middle-aged men to get fit clad in lycra on two wheels, “this is not just about the cost of living but good product meeting increased demand.” However he said itwas “difficult to tell” if that demand would subside after a change in the weather. Birch said Halfords, where 80% of sales now relate to motoring, was “cautiously optimistic” for December after reporting a 3.3% rise in total sales in the half year to £893.3m with pre tax profits down 3.4% to £17.2m. He said most of its shoppers were basic rate tax payers who have “survived [thisweek’s] budget relatively unscathed”. “Christmas is still unknown, but we are definitely not in the territory of spend, spend spend,” he said. 12.07pm GMT Goldman Sachs has announced plans to grow its Birmingham office and double its workforce from 500 to over 1,000 in the “coming years”. The banking group said it formed part of efforts to “deepen our commitment to the UK economy”. That comes alongside JP Morgan’s plan to build a new London HQ in Canary Wharf, announced this morning. 10.56am GMT 10-year bond yields rise as investors question credibility of budget plans Some UK bond yields are now moving a little higher, as the City continues to analyse the budget. The yield (or interest rate) on 10-year gilts has gained four basis points to 4.46% today, which erodes around half of the recovery in yields yesterday. Investors will have noted that while the spending increases in the budget happen quite soon, the tax rises are more back-loaded. As City firm TS Lombard put it: Tightening is mostly kicked into the back-end of the forecast period, with policy actually adding to borrowing in the next few years. The UK is left with a bigger state funded by higher taxes, while fiscal headroom and debt dynamics remain fragile. French bank BNP Paribas warn the budget could be “built on shaky foundations”, and question whether the government would really push through tax rises close to the next election. They say: Whether by luck or judgement, the budget delivered a policy mix that is likely to appease the parliamentary Labour party, voters, and even the market – at least for now. This is because the fundamentals of it came broadly in line with market expectations, giveaways on welfare spending and avoidance of a manifesto breach should quell fears of rebellion within the party, and voters are likely to feel the positive impact of lower energy bills. That said, questions around the credibility of the measures remain, particularly around their backloaded timing – which happens to coincide with the next general election – and the government’s ability to deliver them. 10.44am GMT IFS: Reeves's budget plans could be 'fiscal fiction' Rachel Reeves has risked Labour campaigning for the next general election on tax and spending plans which could amount to “fiscal fiction,” the Institute for Fiscal Studies has warned. In its verdict on the chancellor’s autumn budget, the leading experts on the public finances said Reeves had delayed tax rises and baked-in spending cuts that kick-in just before voters next go to the polls in 2029. Helen Miller, the IFS director, says: “The fiscal forecasts are predicated on spending plans that would involve near-heroic restraint in an election year, and a back-loaded 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 it’s plans. But I have my doubts.” #BUDGET2025 EVENT LIVE NOW: We present our IFS overnight analysis of yesterday’s Budget, starting with our opening remarks from Director @HelenMiller_IFS. 🖥️ Watch live here: https://t.co/pfXd7veZen❓ Ask questions here: https://t.co/Lrat08Y9uo— Institute for Fiscal Studies (@TheIFS) November 27, 2025 With Labour trailing Nigel Farage’s Reform UK in the opinion polls, the thinktank said basic-rate taxpayers will be expected to pay £220 more tax per year by 2029, while those on a higher-rate will pay £600 more per year. Reeves placed a massive £15bn increase in personal taxes at the centre of her revenue-raising efforts – centred on a longer-than-anticipated three-year freeze in tax thresholds. One in four workers will be paying the higher income tax rate by 2030 because of that freeze, which opposition parties described as a war on the middle class. Updated at 10.44am GMT 10.14am GMT Although the serious breach by the OBR raises questions that need to be addressed urgently, it is fair to point that things could have gone much “worse”, Professor Costas Milas of the Management School at the University of Liverpool tells us: As it turned out to be the case, movements in yields and sterling during the breach were not that big. Think, however, of the alternative where the OBR report was assessing the implications of an income tax rise. This would have indeed been a very surprising tax measure (since it was ruled out previously) which would have impacted hugely on markets. Ironically, then, all these mild Budget-related leaks over the previous days ensured that yesterday’s serious breach had less of a financial impact than otherwise! Related: How Rachel Reeves’s budget was leaked 40 minutes early This chart shows how 10-year bond yields briefly gyrated when news alerts about the OBR’s forecasts reached trading desks around 11.41am yesterday, nearly an hour before the chancellor began her speech. Interactive 10.09am GMT Less positively, worries about the UK economy could also prompt the Bank of England to cut interest rates in the months ahead. Yesterday the Office for Budget Responsibility lowered its forecast for real GDP growth to an average of 1.5% between 2026 and 2029, down from 1.8% in March. That, and the OBR’s cut to trend productivity growth, has darkened the growth outlook. Sylwia Hubar, UK economist at Natixis CIB, says: In our opinion, the strict fiscal stance is likely to weigh on growth outlook next year, which should pave the way to more monetary policy accommodation in line with our expectations. 9.53am GMT Dutch bank ABN Amro agrees that the Bank of England is now more likely to deliver a Christmas rate cut. They explain: The most consequential measure in yesterday’s budget from a monetary policy point of view was a fall in household energy bills, with the government now part-funding the renewables levy on energy bills. This, alongside other measures such as the now obligatory annual freeze in fuel duty, will lower inflation by 0.3pp next year. Already, financial markets had been pricing a higher risk of a December cut after somewhat more benign incoming data. Barring a big upside surprise in the November CPI data – released 17 December – we now expect the MPC to lower Bank Rate by 25bp to 3.75% when it meets the day after on the 18th. Updated at 9.53am GMT 9.29am GMT December UK interest rate cut more likely after budget A cut to UK interest rates next month is looking a near-certainty after the budget. The money markets are indicating there’s a greater than 90% chance that the Bank of England lowers base rate by a quarter of one percentage point at its 18 December meeting, down from 4% to 3.75%. That’s up from around 85% earlier this week, before the budget. Shares in housebuilders, who could see higher demand if rates are lower, have risen this morning; Persimmon are up 1.6%, leading the risers on the FTSE 100 share index. Rate cut expectations have risen because some budget measures are deflationary, such as cuts to energy bills and the freeze on rail fares. The money markets are predicting over 60 basis points of cuts to Bank Rate by the end of next year, whch indicates two quarter-point cuts are fully priced in with the possibility of a third. Benjamin Jones, global head of research at Invesco explains: The budget is a little less contractionary than some feared given income tax rates were left untouched. But it is still deflationary and with recent inflationary trends already showing less pressure the Bank of England can now be expected to resume its cutting cycle. We expect the BoE to cut in December and marginally more in 2026 than is currently priced by money markets. That should mean mortgage rates fall more quickly and new rates move below outstanding rates. The mortgage squeeze UK households have experienced in recent years should start to shift to easing and allowing households to become a but more willing to spend. Updated at 9.30am GMT 9.05am GMT The financial markets’ reaction to the budget is a case of “so far, so good”, reports Moody’s Analytics. Andrew Hunter, their senior economist, says: After a brief spike amid the OBR’s premature publishing of its fiscal forecasts, the 10-year U.K. gilt yield was slightly lower on the day, while sterling and the U.K. stock market were both up. Markets appear to have welcomed the increase in fiscal headroom, and the chancellor’s announcement that the government will move to only one fiscal assessment by the OBR each year should also help restore some predictability to U.K. fiscal policy. Here are the key points from their analysis: As expected, the government announced another round of tax hikes in November’s budget. But this was partly offset by higher spending and the net fiscal tightening is set to be smaller than assumed in our November baseline This was helped by new forecasts from the Office for Budget Responsibility which left the government with a much smaller fiscal hole to fill than had been widely rumoured The OBR forecasts that the government will meet its key fiscal target of balancing the current budget by 2029-2030 by a margin of £22 billion, a larger degree of headroom than it had before The budget presents upside risks to our forecast for GDP growth in the near term, but fiscal consolidation will still weigh on the economy over the coming years 8.49am GMT Gambling group Flutter is also expecting a hit to profits from the new gambling taxes. Flutter, whose brands include FanDuel, PokerStars, Paddy Power and Betfair, told the City this morning that the tax increase will impact its underlying earnings by around $320m (£240m) in 2025-26 and $540m in 2026-27. It hopes to offset the hit by up to 40% by 2027 though cost reductions including cutting promotion and marketing spend Kevin Harrington, UKI CEO of Flutter, says the budget tax increases are “a very disappointing outcome”, adding: The Chancellor rightly wants to address harm, but these changes will hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight. These black market operators don’t pay tax and don’t invest in safer gambling. At 40 percent, the UK’s remote gaming duty is now above countries such as the Netherlands, where a recent tax increase saw a rise in illegal gambling and a fall in Government receipts. Yesterday Meg Hillier, the chair of the Treasury select committee, said Reeves had rightly refused to bow to industry “scaremongering” about the impact of higher taxes. Related: Online betting firms to pay billions more in UK tax, Reeves confirms 8.39am GMT Gilts calm as UK budget pleases bond markets The bond market continues to take the budget in its stride. Benchmark UK 10-year gilts are trading flat today, after a recovery in bond prices pushed down the cost of borrowing on Wednesday. Yields on 30-year gilts have fallen again today too – down another 0.03 percentage points to 5.2%, adding to yesterday’s rally. Analysts at bank ABN Amro say the chancellor gave the City a positive surprise by doubling her headroom to keep within the fiscal rule. They explain: The primary fiscal rule is that the debt ratio must be falling by year 4 of the forecasting horizon. The government now has a headroom of £22bn against meeting this rule (0.6% of GDP), more than double that of the previous budget (£10bn headroom) and approaching that of the historic average (£29bn). This led the Office of Budget Responsibility (OBR) to modestly raise its probability of the government meeting the fiscal rules to 59% from 54% previously – still on the low side, but an important step in the right direction in our view. Updated at 8.39am GMT 8.16am GMT Betting company share drop after budget tax hike In the City, shares in some betting companies are dropping sharply after they reported that the new gambling levies in the budget will hit their earnings. Rank Group, which runs Grosvenor Casinos and Mecca bingo, have dropped by 10% in early trading. Evoke, the firm behind William Hill, 888 and Mr Green, are down over 5%. Last night, Rank Group told shareholders that it expect a hit of about £40m to its annual operating profit from the UK’s tax changes which begin in April 2026. Evoke estimates that the tax changes will increase its duty costs by approximately £125-£135m per year, and that it could mitigate half that cost through savings and retail store closures. In the budget, Rachel Reeves almost doubled the Remote Gaming Duty – which applies to gaming over the internet, telephone, by television, or radio – from 21% to 40% and abolished Bingo Duty. The changes are expected to raise an extra £1.1bn a year by 2029-30. Related: Online betting firms to pay billions more in UK tax, Reeves confirms Updated at 9.04am GMT 8.05am GMT Reeves: have confidence in OBR after 'serious error' Rachel Reeves has expressed confidence in the Office for Budget Responsibility, and its chief Richard Hughes, over yesterday’s leak. She told Sky News that the incident was a serious breach by the OBR, and mustn’t be repeated, saying: Richard Hughes wrote to me yesterday evening, apologising for their error. It was a serious error and a serious breach. They have announced an investigation which will report to me very quickly. But I do have confidence in Richard and the OBR. They do important work, but what happened yesterday let me down. it shouldn’t have happened and it must never happen again. 7.58am GMT Professor Ciaran Martin, the cyber-security expert who will help with the OBR leak investigation, is currently Professor of Practice in the Management of Public Organisations at the Blavatnik School of Government at the University of Oxford. His biography there explains: Ciaran led a fundamental shift in the UK’s approach to cyber security in the second half of the last decade. He successfully advocated for a wholesale change of approach towards a more interventionist posture and this was adopted by the Government in the 2015 National Security Strategy, leading to the creation of the NCSC in 2016 under his leadership. Over the same timeframe, the UK has moved from joint eighth to first in the International Telecommunications Union’s Global Cybersecurity Index and the NCSC model has been studied widely and adopted in countries like Canada and Australia. 7.49am GMT Cyber-security expert to assist in OBR investigation OBR chief Richard Hughes has also revealed today that Professor Ciaran Martin, former head of the UK’s National Cyber Security Centre, will provide expert input into the investigation into yesterday’s accidental early release of the Economic and Fiscal Outlook. Q: Is that a hint that a link which you thought was hidden was found by someone externally, rather than someone at the OBR accidentally publishing early? Hughes tells Radio 4’s Today programme that the report wasn’t published onto the OBR’s web page itself, but it appears there was a link to the report that “an external person” was able to access. [The report, outlining the fiscal implications of the budget measures plus the OBR’s latest forecasts, was meant to be released after the chancellor finished speaking at around 1.30pm, but instead was being reported by Reuters from around 11.40am yesterday] He says: We need to get to the bottom of what exactly happened. We’re going to do a full investigation. There’ll be a full report to parliament. We’re going to do that work quickly so people can have assurance in our systems and that can be restored. Updated at 8.02am GMT 7.35am GMT Reeves: working people will pay a bit more through income tax threshold freeze Rachel Reeves has been grilled on Sky News on whether the budget broke the government’s promise not to raise taxes on workers. Q: You promised in your manifesto not to raise taxes on working people. You’ve broken that pledge, haven’t you? Reeves, who is in Coventry, replies that Labour were “very specific in the manifesto” that they wouldn’t raise the rates of income tax, national insurance or VAT. But she also concedes that working people “will pay a bit more” due to the extended income tax threshold freeze (which is estimated to bring in £7.6bn in the 2029-30 tax year). The chancellor says: I do recognize that yesterday, I have asked working people to contribute a bit more by freezing those thresholds for a further three years from 2028. I do recognize that will mean that working people pay a bit more, but I have kept that contribution to an absolute minimum by closing…a number of tax loopholes and also bearing down on government spending on waste and inefficiency, and as a result, I have managed to keep that to an absolute minimum. People recognise that the public finances are under a lot of pressure, the chancellor adds. She cites the demands on defence spending, tariffs, the disruptions to supply chains, the ongoing conflict around the world, and the OBR’s downgrade to its forecast for UK productivity growth. Q: But the Institute for Fiscal Studies say you have broken the manifesto pledge: Reeves says she isn’t denying that that the freeze will have an impact on working people. Updated at 7.40am GMT 7.24am GMT Rachel Reeves has embarked on the traditional early morning media round to defend her budget. The chancellor has rejected criticisms that her annual budget had raised taxes to fund higher welfare spending, and told Times Radio that she intended to take further measures to boost the British economy. She said: “There’s plenty more that I’m going to do to grow our economy and make working people better off.” 7.22am GMT OBR chief 'personally mortified' by leak of budget report yesterday The head of the Office for Budget Responsibility has admitted that the fiscal watchdog “let people down” yesterday by releasing its economic and fiscal outlook, containing the details of the budget, before it had been announced by Rachel Reeves. Speaking on the Today Programme, Richard Hughes says he has written to the Chancellor and the chair of the Treasury select committee to apologize for the inadvertent error, “for which I take full responsibility”. Hughes says an investigation into what happened has been initiated, and will identify the actions we need to take to make sure it will never happen again. He also admits he feels “personally mortified by what happened”, adding: We let people down yesterday, and we’ll make sure it doesn’t happen again. 7.12am GMT JP Morgan to build new London HQ in 'vote of confidence' in UK Wall Street banking giant JP Morgan has just given the UK economy, and the Starmer/Reeves government, a vote of confidence. JP Morgan has announced it will build a new three-million square foot “landmark tower” in London’s Canary Wharf financial district, to be its new UK HQ. JP Morgan says the project would contribute almost £10bn to the local economy - including the cost of construction - create 7,800 jobs, and give its employees and clients “a first-class working environment” with views across the River Thames to central London. JPMorgan chairman and CEO Jamie Dimon pointed to the UK government’s “focus on economic growth” as a factor behind the decision, saying: “London has been a trading and financial hub for more than a thousand years, and maintaining it as a vibrant place for finance and business is critical to the health of the UK economy. This building will represent our lasting commitment to the city, the UK, our clients and our people. The UK government’s priority of economic growth has been a critical factor in helping us make this decision.” Chancellor Rachel Reeves says the move is “a multi-billion pound vote of confidence in the UK economy”, saying: “My Budget doubles down on growth as our number one priority by creating the conditions for businesses to invest and succeed. I am thrilled that JPMorganChase has chosen London for its landmark new building - a multi-billion pound vote of confidence in the UK economy and this government’s plans for growth, which are built on the rock of stability.” However…. yesterday’s OBR forecasts actually show growth over the next few years will be lower than expected: Interactive 7.00am GMT Pound at one-month high after budget The pound has inched up to a one-month high against the US dollar, as City traders react to yesterday’s budget announcement. Sterling traded as high as $1.3268 early this morning, the highest since 29 October, adding to yesterday’s gains. There’s general relief in the markets that Rachel Reeves doubled her headroom to hit her fiscal rule for a balanced current budget in 2029-30, from £9.9bn to almost £22bn. That pushed down UK borrowing costs yesterday. That lowers the risk of being knocked off course by events, and could shore up Reeves and Keir Starmer’s positions. Andrew Wishart, economist at Berenberg explains that political risk has been lowered: Taking the chance offered by a helpful official forecast to avoid hard decisions has increased the Chancellor’s and Prime Minister’s chance of political survival. The fall in yields and strengthening of the pound is probably more due to the waning of political risk rather than any changes to official forecasts or the policy package.” 6.49am GMT We also have budget analysis from research institute NIESR (the National Institute of Economic and Social Research) to digest. They identify that freezing the income tax thresholds until the end of the decade will fall on poorer workers the most (a point also made by Resolution Foundation this morning). [Reminder: higher-rate threshold and additional-rate threshold are to be frozen at £12,570, £50,270 and £125,140, respectively until 2030]. NIESR also critises the ‘lack of economic vision’ in the budget: Today’s Budget locks in a high-tax, high-debt steady state in a world of low productivity growth and higher interest rates. Even the historically large tax share of GDP now planned is only just enough to stabilise – not reduce – a debt ratio stuck around 100 per cent of GDP for the foreseeable future. Macroeconomically, the Budget implies a modest fiscal tightening over the forecast. Fiscal policy shifts from being a tailwind to a headwind for growth. Inflation is expected to be 0.3 pp lower over the next year, reflecting energy-related measures and the fuel duty freeze extension. The key question is whether the Bank of England chooses to look through this price effect or views it as altering the underlying inflation profile. Distributionally, the extension of the income tax threshold freeze to 2030 will fall disproportionately on the bottom half of the income distribution. Despite being the second Budget of this government’s term, there was a notable lack of economic vision beyond clearing fiscal hurdles. Reforms to the triple lock, council tax, and VAT were pushed into the background while the Chancellor focused – justifiably - on meeting the fiscal rules. Even then, the £22bn of fiscal headroom is not large, and the probability of meeting the fiscal rules remains, in essence, a coin toss. 6.40am GMT Resolution Foundation's overnight analysis: the key points Here are the key points from Resolution Foundation’s overnight analysis: Poorer working age families protected most, richer pensioners spared the worst. Policies announced in this Parliament have been progressive, particularly for working-age households. The poorest half of families have gained £90 a year on average, compared to losses of £1,000 for the richest half. It was less progressive for pensioners however, with the poorest half losing £220 on average, while the richest half lost £680. The manifesto tax pledge has cost working people... Having previously hinted at raising Income Tax rates, the Chancellor chose instead to freeze personal tax thresholds for three more years. But raising all rates by 1p would have been less costly than freezing thresholds for anyone with an income below £35,000. Indeed, all but the top ten per cent of the income distribution are worse off because of opting for threshold freezes over rate rises (which raise similar amounts of revenue). …But abolishing the two-child limit helps working families. Three-in-five families set to benefit from its scrapping include at least one person in work. Overall, 560,000 families will gain an average of £5,310 in 2029-30. Pre-election austerity has been pencilled in... The departmental spending cuts announced in 2029-30, coupled with the Government’s commitment to raise health and defence spending and protect per pupil school funding, imply £6.4 billion of cuts to other departments like the Home Office, Justice and local government. Cuts of this nature would be equivalent to 88 per cent of the average annual cuts made during the austerity years (2009-10 to 2018-19). …As have pre-election tax rises. Nearly three-quarters of the £77 billion of extra tax over the next five years (2026-27 to 2030-31) is coming after April 2029, with £26 billion in 2029-30 alone. Debt is being driven up, not down. Reducing the country’s debt was cited as one of the Chancellor’s key priorities. But debt is rising over the forecast, and higher than forecast in March. For example, Public Sector Net Financial Liabilities (PSNLF) is rising as a share of GDP over this Parliament – from 81.3 per cent in 2024-25 to 83.7 per cent in 2028-29, before falling to 82.2 per cent in 2030-31. 6.40am GMT Introduction: UK's fiscal repair job not complete after budget Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. It’s the morning after the budget, a time when the real story behind the fiscal event often emerges. And today, the Resolution Foundation is warning that the job of repairing the UK’s public finance is “far from complete”, and that major tax rises and cuts to public services are coming down the line. The think tank has issued its overnight analysis of Rachel Reeves’s budget, which shows that pre-election austerity and tax rises are both pencilled in. And while those back-loaded tax rises are large (bringing in £26bn), extra spending kicks in sooner, so UK debt is on track to be higher than forecast in March. Interactive Notably, Resolution Foundation also find that less wealthy families would be better off if the chancellor had simply broken her manifesto pledges and raised income tax, rather than simply freezing the thresholds for longer and relying on ‘fiscal drag’ to take more tax off people as their wages rise. Ruth Curtice, chief executive of the Resolution Foundation, says: “The Chancellor needed to clear three crucial hurdles in her Budget – to ease cost of living pressures, tax smartly and repair the public finances. “The Chancellor was front-footed – and front-loaded – on cost of living support. Over half a million larger families will get a major income boost next spring, while typical energy bills will be cut by around £130 annually for the next three years, though support then fades away. “Sensible tax reforms will also help to level up the tax treatment of income. But, ironically, sticking to her manifesto tax pledge has cost millions of low-to-middle earners, who would have been better off with their tax rates rising than their thresholds being frozen. “By more than doubling the headroom against her fiscal rules, the Chancellor has taken steps to repair the public finances, too. But appearances can be deceiving. Debt is up and most of the fiscal repair job has been put on hold for three years. “One hurdle that remains to be cleared is boosting growth – which has been downgraded by the OBR, along with the outlook for living standards. Until that challenge is taken on, we can expect plenty more bracing Budgets.” The agenda 9am GMT: Resolution Foundation event: ‘what the budget means for the public, financial markets and the cost of living’ 10am GMT: Eurozone economic sentiment index 10:30am - 12:00pm GMT: IFS to present its analysis of the budget Updated at 7.09am GMT