After a long wait, Autumn Budget day is finally here
Chancellor Rachel Reeves poses with the red box outside number 11 Downing Street on October 30, 2024 in London, England. This is the first Budget presented by the new Labour government and Chancellor of the Exchequer, Rachel Reeves.
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It’s Nov. 26 and Autumn Budget day is finally here!
It’s been a longer-than-usual wait this year, with budgets usually delivered in late October. We’ve also had so much news flow on what tax rises could be included in Chancellor Rachel Reeves’ budget statement that it’s become hard to keep up.
This “kite flying” of policy proposals — designed to test public and market reaction to an idea before committing to it — has led to criticism of the Treasury, with analysts saying the near-constant drip feed of information (and the scrapping of policy ideas) has confused the public, businesses and markets.
It has also made it harder to gauge what we’re actually going to get when Finance Minister Rachel Reeves finally unveils her spending and taxation plans for the year ahead.
CNBC has taken a close eye on what we might see later today when Reeves unveils the Autumn Budget around 12.30 p.m. London time.
Read more: The UK’s Autumn Budget is coming: Here’s what it could mean for your money
— Holly Ellyatt
Is there a way to trade the budget?
U.K. Chancellor of the Exchequer Rachel Reeves delivers a speech in the media briefing room of 9 Downing Street, ahead of the forthcoming Budget, on November 04, 2025 in London, England.
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Ahead of the chancellor’s critical statement — which could herald tax rises, spending cuts, or a combination of the two — fund managers are lining up high-conviction trades on U.K. housing, the British currency and beaten-down cyclical equities.
Take a closer look here: Three ways for investors to trade the budget
— Hugh Leask
Expect a ‘smorgasbord’ of tax rises today
What Sanjay Raja, chief U.K. economist at Deutsche Bank, had to say ahead of the budget:
“It’s a very unusual budget, because for the first time in since I can remember, we know how this budget is going to start and we know how this budget is going to end. It starts with that £20 billion fiscal hole … It ends with the chancellor taking her fiscal headroom back up to £15 to 20 billion, so potentially double what she had.
Now the question for us, the question for the markets, for the public, for investors, for businesses, is, how does she get through that journey from minus £20 [billion] to positive £15 to 20 billion?
And it looks like there will be a smorgasbord of tax raising measures coming through as part of [Wednesday’s] budget … while it won’t be as exciting as last year’s budget, we hope this will be a historic budget. On our count, this will be the third biggest tax raising budget in the post war period.”
— Holly Ellyatt
Eyes are on the British Pound
The British pound plunged to a record low on Monday morning in Asia, following last week’s announcement by the new U.K. government that it would implement tax cuts and investment incentives to boost growth.
Markets will be watching the strength of sterling this morning as speculation ahead of the U.K. budget has led to put calls. The price of the currency will act as a real-time gauge on what investors make of the chancellor’s plan for Britain’s economy when she presents her taxation and spending plans later today.
Earlier Wednesday morning, the pound was up 0.18% against the dollar.
“Sterling appears to be in a no-win situation in regards to the budget,” according to Alpine Macro’s Chief Global Fixed Income and Currency Strategist Harvinder Kalirai.
“If Chancellor Reeves tightens fiscal policy, it will open the door for more easing by the [Bank of England]. Tight fiscal/easy monetary policy is a classic mix for a weaker currency,” he said. “If Reeves treads cautiously, then concerns over U.K. deficits and a rising debt burden should weigh on sterling.”
Leveraged investors have GBP shorts tied to the event, according to Daniel Tobon, head of G10 FX strategy at Citi. “Notably, despite worsening news on the budget and weaker U.K. data, GBP has failed to sell-off in recent weeks. This suggests a saturated short GBP position with the bad news likely priced in,” he said.
Citi had been targeting 0.88 for EURGBP into the budget, “and that target has been met but EURGBP has also failed to push higher despite numerous attempts,” Tobon told CNBC in emailed comments.
“Absent a negative shock in the budget, we see a greater risk of a ‘position squeeze’ (unwind of short GBP positions) and suspect some investors are already starting to unwind these short GBP trades as gilts fail to sell-off further.”
— Tasmin Lockwood
