Rachel Reeves's budget has led to a spike in UK government borrowing costs and market reaction suggests increased caution from the Bank of England regarding interest rate cuts.
Susannah Streeter mentions that there was a quiet optimism during Reeves's speech, but it has since dissipated, leading to a heightened risk premium for UK debt.
City analysts indicate that the budget announced by Reeves was more expansionary than anticipated, including increased near-term borrowing and plans for higher taxes.
The chancellor's plans to increase spending and roll out a more ambitious budget could lead to heightened economic growth and inflation, complicating rate cuts from the Bank of England.
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