In their fiscal package Liz Truss and her chancellor Kwasi Kwarteng announced a series of unfunded tax cuts Financial market reaction to Rachel Reeves’s Budget has been in “no way comparable” to what was seen after Liz Truss’s mini-Budget in 2022, experts have said.
“The level of bond market volatility is nothing like the scale which occurred around the Trussenomics mini-Budget in 2022. This time around gilt yields have edged up from 4 per cent, when the Labour Government came into power in July to around 4.5 per cent on Thursday but have since come down. At the Budget, Rachel Reeves changed the fiscal rules – which govern her tax and spending plans – to allow her to borrow more money for investment in infrastructure projects.
“The reaction is more a natural adjustment to the announcement of an uptick in government borrowing to bankroll spending projects, following a rule change which has unlocked over £50bn in additional capital investment. Financial market will be keeping a close eye on how cash from the bumper borrowing facility will be used.”