"This year's pre-Budget season has been unusually leaky, with a steady drip of potential measures floated in the media - from manifesto breaking hikes to income tax, to soak-the-rich mansion taxes, to fundamental changes in the country's energy policy. Markets suspect this is deliberate expectation management by the Treasury. It is a way to gauge public and political reaction before finalising the package, and to soften the ground for unpopular announcements."
"From a market perspective, this approach can cut both ways. On the one hand, it reduces the risk of a nasty surprise that jolts sterling on Budget day. On the other, it risks signalling indecision and political fragility - especially if the final measures appear shaped by short-term pushback rather than a coherent fiscal strategy. Traders will be alert to whether the final Budget feels like a carefully calibrated plan, or a reactive compromise shaped by polling and press headlines."
Sterling is trading near a seven-month low against the dollar. Chancellor Reeves faces a £20–30 billion shortfall in the public finances and is likely to prioritise tax rises over spending restraint. Pre-Budget leaks have floated income tax hikes, mansion taxes and energy policy shifts as expectation management by the Treasury. Markets view the leaks as reducing surprise risk but also as potential signals of indecision or political fragility. Traders will treat the Budget as a credibility test and focus on whether measures prove inflationary or disinflationary, with energy tax changes especially important for price pressures.
Read at London Business News | Londonlovesbusiness.com
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