Chancellor of the Exchequer John Healey faces a test of market confidence in his Oct. 28 budget after UK government bonds gained as some investors anticipated he would preserve Britain’s fiscal rules.
Healey has pledged to follow those rules while retaining a margin for uncertainty. The bonds, known as gilts, have risen ahead of the budget, though the expectations described are those of some investors.
Debt worries deepened after previous bouts of U.S. and UK bond-market volatility made it more expensive for governments to raise money. Trading in interest-rate markets also suggests a cut at the Bank of England’s November meeting is unlikely. Investors are watching bank officials’ comments on inflation and monetary policy.
Ahead of the budget, UK labor-market and inflation reports are due Oct. 20 and Oct. 21, respectively. Borrowing figures are also scheduled for Oct. 21, followed by retail sales data Oct. 23.
A Press Association review said a higher forecast for 2026-27 borrowing could reduce Healey’s room to respond to economic risks. The Office for Budget Responsibility (OBR) is due to publish its new forecast on Oct. 28, when Healey presents the budget.
