UK Chancellor Unveils Controversial Budget Plan

The UK government's budget announcement led to a significant rise in gilt yields, reflecting market concerns over increased borrowing and tax hikes totaling £40 billion, the highest in decades. Chancellor Rachel Reeves’ plans to redefine debt allowed for an additional £90 billion in borrowing, which, although aimed at stimulating growth, sparked worries about the sustainability of UK debt levels. The 10-year gilt yields climbed to 4.39%, marking a new post-election high, with the increase in borrowing set to reach £299.9 billion by March 2025. The FTSE 100 saw a brief rise during Reeves' speech but later declined, indicating mixed market reactions. Analysts pointed out the widening yield gap between UK and German bonds, suggesting increased risk perception among investors. The overall fiscal strategy, inherited from previous Conservative leadership, remains contentious as Labour aims to deliver on its election pledges amidst rising economic pressures.