Chancellor Reeves Faces Market Backlash Over Budget

Chancellor Rachel Reeves is facing market backlash after unveiling a Budget that increases taxes and borrowing by £32.3 billion annually to support state spending. This move has led to the pound dropping to its lowest since August and an increase in UK government bond yields, reminiscent of the market reaction to Liz Truss's 2022 mini-Budget. Reeves and her team are attempting to reassure investors by emphasizing their commitment to 'economic and fiscal stability'. Critics are concerned that the borrowing could fuel inflation and hinder potential interest rate cuts. Meanwhile, the Office for Budget Responsibility notes that mortgage rates are expected to rise, potentially impacting homeowners significantly. The Budget's expansionary nature suggests that the Bank of England may need to maintain higher interest rates than previously anticipated.