UK Markets React to Reeves' Budget Announcement

Chancellor Rachel Reeves' first budget announcement has sparked significant market turmoil, with the pound falling near $1.28 and UK government borrowing costs reaching a yearly high, reminiscent of the market chaos following the previous government's mini-budget. The budget, which includes plans for an average £32.3 billion increase in borrowing over five years and substantial tax hikes, has led to concerns about inflation and slower interest rate cuts from the Bank of England. Despite these worries, the FTSE 250 index showed resilience, climbing 0.3%, while the FTSE 100 index fell significantly due to healthcare sector declines. Reeves aims to balance the budget by 2029/30 and has introduced measures such as increased business taxes and changes to inheritance tax exemptions. While the government anticipates economic growth, analysts remain skeptical about the budget's long-term impacts on investment and public finances. The overall sentiment reflects a cautious outlook as markets adjust to the implications of Reeves' fiscal strategies.