The recent blowout signals to the government that excess borrowing is unacceptable in the gilt market. Fiscal headroom has diminished due to reversals in welfare reforms and winter fuel cuts. Warnings indicate that fiscal tightening and spending reductions may lead to negative growth in the UK. A pronounced slowdown or recession could prompt the Bank of England to implement aggressive rate cuts. Anticipations for the Autumn budget suggest potential tax increases and spending reductions, maintaining an uncertainty premium in the gilt market.
last week's blowout is reminder to the government that gilt market will not accept excess borrowing
fiscal tightening along with spending cuts will result in negative growth for the UK
this blowout solidifies the current fiscal rules
going forward, we look to the Autumn budget where we can likely expect taxes and spending cuts
Collection
[
|
...
]