Capital Economy, Business and Finance
UK borrowing costs hit their highest levels of the year yesterday afternoon as bond investors digested the finer details of Rachel Reeves’s budget.
The FTSE 100 and 250 also took a hammering. Confident communication and a good deal of pitch-rolling by Reeves has avoided a Truss-style meltdown, but there’s no denying the sheer scale of anticipated borrowing has caused concern.
Two numbers to contend with: 2.5 per cent and £120 billion. The first is the OBR’s forecast rate of inflation in 2025. The second is the scale of extra gilt issuances over the next four years.
In another blow, the IFS warned that its main revenue raising measure – a hike on employer National Insurance contributions – could bring in close to £10 billion less than accounted for, because of the impact it would have on wages.
