What began as a routine build-up to Rachel Reeves’ Budget announcement turned into a full-blown financial wobble yesterday, all thanks to a misplaced document.
The Office for Budget Responsibility accidentally pushed out its report earlier than planned—and markets reacted instantly.
Within moments, the pound shot up toward $1.3175, only to slide back again just as quickly.
Even government borrowing costs—tracked through ten-year gilt yields—lurched unpredictably, dropping sharply before climbing right back up as global investors tried to make sense of what they’d just seen.
Investors Try to Decode the Budget Before Hearing It
The leak meant traders were sifting through the OBR’s assessment before Reeves even stood up in the Commons.
And with confidence already fragile, the timing could not have been worse.
Instead of stability, the early release stirred nerves about what direction Reeves would take—and whether her plans would convince the people who matter most in moments like this: the bond markets.
Calls for Clarity Over Chaos
Ahead of the speech, economists and strategists were practically shouting the same message—keep it simple.
The Chancellor had been urged to avoid a messy patchwork of tax tweaks simply to plug growing financial gaps.
Mark Dowding from RBC BlueBay Asset Management didn’t mince words.
Raising taxes too broadly, he argued, risks slowing the economy rather than helping it.
His message: if the government wants serious savings, welfare spending has to be addressed.
A Debate Over Cuts, Taxes, and What Comes First
Former Bank of England policymaker Andrew Sentance took a more aggressive stance: a hefty £20–£25 billion in spending cuts paired with £5–£10 billion in tax rises.
His view? Tough medicine now avoids worse pain later.
Others, like Saxo strategist Neil Wilson, considered this Budget possibly the most defining in years—not just for Reeves, but for the Starmer government as a whole. Wilson laid out three big questions hanging over everything:
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Will tax hikes crush growth?
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Will they fuel inflation?
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Are the government’s forecasts even realistic?
In other words, can Reeves do this without accidentally tripping several economic alarms at once?
Market Jitters After Reeves’ U-Turn
Making matters more tense, gilt yields had already climbed in the days leading up to the speech.
Reeves had ditched a proposal to raise income-tax rates—a politically sensitive move, but one that markets saw as a clean, straightforward way to bring in cash.
To some investors, reversing course suggested the government was unwilling to take uncomfortable decisions, even if they were necessary.
“Bond Markets Will Be Watching Everything”
Bond specialists made it clear they weren’t going to let anything slide.
Oliver Faizallah from Charles Stanley warned that the government’s hesitation signalled weakness.
Bond traders, he said, would ultimately decide whether Reeves’ numbers stack up or not.
His colleague Patrick Farrell went even further.
Reeves needed a “Goldilocks Budget”—not too harsh, not too loose, just right.
And hitting that perfect middle point, he said, is incredibly hard.
Deliver too-tight measures and the economy chokes. Go too far the other way and inflation roars back.
And in between all of that, political stability hangs in the balance.
The Stakes Could Not Be Higher
With the country facing a sizeable fiscal gap, Reeves’ choices will shape everything—from household budgets to business investment to the government’s credibility with international lenders.
And after yesterday’s chaotic market reaction, one thing became clear: this Budget will not be judged by speeches or headlines, but by whether investors believe the government has a plan that works.
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