Good morning and welcome back to the City AM liveblog.
The Autumn Budget started nearly an hour earlier than expected on 26 November after the fiscal watchdog leaked its forecasts for the UK and with it all the Labour government’s economic policy for the next year.
But start as you mean to end rings true as the Budget continues to rumble on in both the political and market landscape.
Fresh data yesterday revealed the Budget briefing bonanza – since dubbed the Leaky War – led to equity funds suffering their deepest and most prolonged bout of outflows on record.
Investors pulled more than £10bn in the past six months and UK-focused funds were the hardest fit.
The UK saw almost £847m flee, according to data compiled by global funds network Calastone, with analysts pointing to protracted Budget uncertainty among the chief areas of concern for investors.
Only one month out of the last 55 has seen inflows to UK-focused funds and that followed Rachel Reeves’ first Budget in 2024 when investors crystallised capital gains in the weeks running up to her expected capital gains tax raid, before recycling the cash back into funds afterwards.
Analysts have sounded off on the ordeal with Edward Glyn, head of global markets at Calastone, stating the “political narrative has played havoc with UK savers in recent months.”
He added: “Never have we seen such consistent or large-scale selling before.”
Meanwhile yesterday, a bond specialist warned that the flurry of fresh Budget spending commitments by Rachel Reeves could push the cost of government borrowing to the highest seen this century.
David Zahn, head of European fixed income at Franklin Templeton, said the yield on 30 year gilts could rise to as much as 6 per cent in 2026 as Reeves struggles to fund her planned increases on spending, including in areas like welfare.
Here’s a few of our top stories from yesterday
Construction in worst downturn for five-and-a-half years
Is HSBC’s chair hunt really over?
Stride criticises FCA for not investigating Treasury
Birthday cookies and fine dining: Inside the law firm aiming for 5-star service
Equity fund outflows hit fresh record as Budget uncertainty triggered UK selloff