Higher growth, higher inflation: economist verdict on UK budget
STOXX 600 down 0.8%
BNP capital buffers disappoint
Microsoft, Meta warn on AI costs
Nasdaq futures down 0.8%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
HIGHER GROWTH, HIGHER INFLATION: ECONOMIST VERDICT ON UK BUDGET
Economists are weighing in on how the new tax-heavy UK budget will trickle through to growth and inflation, and a trend is emerging: revisions are mostly to the upside on both counts.
At Bank of America, economists upgraded their UK growth forecast from 1.1% to 1.5% in 2025 and from 1.2% to 1.4% in 2026 on the back of the budget.
"The near-term growth boost from higher public spending and investment increase is likely to outweigh the negative impact of tax rises," they wrote in a note.
BofA also ups its UK inflation forecast from 2.4% to 2.6% in 2025 and from 1.9% to 2.0% in 2026. A rise in the minimum wage in April 2025 is one factor, as well as higher employer national insurance contributions passing through to inflation.
BNP Paribas economists also said the budget reinforces their cautiously optimistic view on UK growth.
"The combination of duty increases and the demand effect resulting from the investment pledges does however pose upside risks to inflation. This supports our view of a gradual approach
to monetary policy easing from the Bank of England," the BNP note read.
Elsewhere, UBS economist Dean Turner notes the tax burden is set to increase to the highest level on record.
"However, more borrowing will allow spending to increase by
around GBP 70bn (~2% of GDP), a large proportion of which will boost growth in the short term," he wrote.
Goldman Sachs economists join the chorus, bringing their UK 2025 GDP growth forecast to 1.6% from 1.5%, as well as raising their core inflation forecasts by 0.2pp through 2025.
This reflects "stronger demand growth, the impact of the change in employer National Insurance Contributions and changes in vehicle excise duty," writes GS.
There are also implications for how GS sees the Bank of England's rate cutting trajectory, with the prospect of stronger 2025 growth likely dampening the urgency for sequential cuts in the short term.
They now expect the BoE to hold the bank rate in December, rather than their previous prediction of a 25 basis point cut.
(Lucy Raitano)
*****
EARLIER ON LIVE MARKETS:
"FRANC-LY, MY DEAR..." TARIFFS WON'T MATTER CLICK HERE
STOXX AT 7-WEEK LOWS CLICK HERE
EUROPE BEFORE THE BELL: TECH DRAG AND BANK EARNINGS CLICK HERE
CLOUDS GATHER OVER 'MAG 7' EARNINGS CLICK HERE
The Magnificent Seven https://reut.rs/4fqh78d
EU open https://tmsnrt.rs/4e4HCPr
Aset Terkait
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
