John Healey avoids bond market wobble with ‘uneventful’ first Budget

{"text":[[{"start":8.68,"text":"Bond investors shrugged off UK chancellor John Healey’s first Budget on Wednesday, as a modest package of tax and spending changes avoided spooking a gilt market already under intense pressure from surging oil prices."}],[{"start":21.08,"text":"Healey delivered what he called “a Budget built on fiscal discipline”, raising taxes on banks while promising more support for households on energy costs. The chancellor set the so-called headroom against the UK’s medium-term borrowing limits — a figure keenly watched by traders — at £15bn, close to where market participants had expected."}],[{"start":42.2,"text":"Sterling was little moved by the end of London trading at just above $1.33, while the UK’s 10-year yield fell 0.03 percentage points to 5.33 per cent as the price of the debt rose, outperforming US Treasuries."}],[{"start":56.19,"text":"“He’s delivered the uneventful Budget he aimed for, and bored investors into submission,” said Gordon Shannon, a fund manager at TwentyFour Asset Management."}],[{"start":66.786,"text":"UK borrowing costs had risen to their highest level in nearly 20 years earlier this month in a global bond sell-off fuelled by inflation fears and worries over hefty government borrowing needs. They had fallen back slightly in recent weeks as investors anticipated a low-key Budget free from big rises in borrowing, outperforming Eurozone debt as worries over France’s debt trajectory rattled markets."}],[{"start":null,"text":"

"}],[{"start":89.474,"text":"“The UK is starting to look like the adult in the room when it comes to fiscal discipline,” said Chris Jeffery, chief investment strategist for Emea at L&G. The chancellor had “demonstrated that [the fiscal] rules are a meaningful and binding constraint on government policy” in his Budget speech, he added."}],[{"start":106.16,"text":"The Debt Management Office on Wednesday announced a small increase in gilt sales for the current fiscal year, from £246bn to £251bn, consisting of a rise in short-term and medium-term debt issuance and a reduction in long-dated gilt sales from the previous estimate — continuing a recent shift towards shorter-term borrowing."}],[{"start":128.04,"text":"Andrew Chorlton, chief investment officer of fixed income at M&G Investments, said the chancellor “seems to have threaded the needle quite well, which has resulted in a quiet day in the gilt market”."}],[{"start":137.64,"text":"But he warned that “avoiding a bond market wobble is only half the job” and that the reduced headroom, down from £23.6bn in March, and a downgrade to the official growth forecast for 2027, showed there was “less room for error”."}],[{"start":153.12,"text":"The UK’s long-term borrowing costs remain the highest in the G7 as the ongoing conflict in the Middle East keeps inflation above the Bank of England’s target, increasing the pressure for further rises in interest rates."}],[{"start":166.4,"text":"The FTSE 100 ended the day fractionally higher, with bank stocks and gambling shares gaining as tax raids on both industries turned out to be smaller than feared."}],[{"start":177.28,"text":"Gambling group Entain’s share price jumped 3.6 per cent while Lloyds Banking Group was up 1.7 per cent."}],[{"start":184.36,"text":"But shares in UK housebuilders dropped sharply after the Budget statement as investors criticised a lack of detail about the new Your First Home scheme. Builders Taylor Wimpey, Persimmon and Barratt Redrow all fell more than 6 per cent."}],[{"start":198.8,"text":"Gervais Williams, head of equities at Premier Miton, said the Budget documents had highlighted that “the scale of the new policy is modest compared with Help to Buy”."}],[{"start":207.64,"text":"“We were hoping for more detail” about the scheme, he added."}],[{"start":211.92,"text":"Some investors said the Budget had delayed the difficult spending and tax decisions needed to keep the public finances sustainable."}],[{"start":219.16,"text":"The Office for Budget Responsibility said the pace of the UK’s fiscal consolidation had “again slowed”, with the direct effects of Budget policies increasing borrowing by £8bn in 2026-27 and £4bn in 2027-28 before reducing borrowing in later years as planned tax increases and spending cuts come through."}],[{"start":240.2,"text":"“The fiscal discipline talk is being weighed against the tough realities of lower growth [and] higher energy costs,” said Stephen Jones, chief investment officer at Aegon Asset Management."}],[{"start":251.16,"text":"The gilt market was “for now is willing to give the benefit of the doubt to Labour, but the level of borrowing is eye-wateringly high in the medium term,” he warned."}],[{"start":264.34,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793245932_5305.mp3"}