Rachel Reeves doesn’t mind if you don't like her Budget

Published On Oct 31, 2024, 1:46 PM

Chancellor Rachel Reeves has introduced a Budget that significantly increases government spending, forecasting a near-record rise in taxes to fund £76 billion a year in new spending. While this has led to a rise in government bond yields and potential interest rate adjustments from the Bank of England, the government aims to bolster long-term economic growth through substantial investments in capital projects. The Chancellor's political credibility, backed by a large majority, contrasts sharply with previous administrations, providing her a stronger foundation to implement these plans. However, the actual effectiveness of this budget remains contingent on the quality and timing of the investments made.

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Stock Forecasts

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Positive

The UK government's increased spending, especially in capital projects, may lead to a boost in economic growth over the long term. However, the immediate impact includes potential increases in interest rates and government bond yields. Investors should monitor the UK economy's response to these decisions as implementation progresses.

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Negative

As interest rates are expected to remain relatively high due to the increased borrowing, financials may face headwinds. However, certain sectors may benefit from increased government spending. Overall, investors should tread cautiously as the market digests these changes.

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