span>span>Wednesday 26th November 2025/span>span> - 14:55 (GMT)/span>/span>
li>Freeze on income-tax thresholds, deepening fiscal drag/li>
li>Higher levies on dividends and savings income/li>
li>Stricter limits on pension salary-sacrifice schemes/li>
li>New taxes on high-value property and mileage-based EV charges/li>
On the spending side, Reeves coupled tax rises with targeted support. Public services receive top-ups while the two-child benefit cap is scrapped - a move signalling a shift toward easing pressure on lower-income households, albeit at higher long-term fiscal cost.
Market reaction was balanced. Gilt yields slipped as investors welcomed a firmer fiscal stance and sterling briefly found support on expectations that tighter public finances may stabilise the UK’s risk premium.
Yet the relief rally was short-lived, with traders quick to focus on softer growth projections. The OBR downgraded its growth projections, warning that the UK economy is expected to expand more slowly than previously forecast over the next five years.
For GBP, the Budget sets up a tug-of-war: improved fiscal credibility should lend support, but higher taxes and slower growth threaten to sap momentum. Analysts expect sterling to remain volatile with its direction hinging on whether the government can convert consolidation into confidence, without choking off economic recovery.
