UK Markets Tumble as Reeves Tax U-Turn Fuels Budget Jitters

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Transcript

00:00It's been a rollercoaster day for UK financial markets.

00:04A report in the day's early hours that Chancellor Rachel Reeves was going to drop plans to raise income taxes

00:10caused the pound to tumble.

00:12UK borrowing costs soared.

00:14Then, only an hour later, we reported that the reason this was being dropped

00:19was because forecasts for the country are looking better.

00:22That caused those moves to pair a little.

00:25Speculation about the budget is becoming more feverish as we head towards the November 26th announcement,

00:31and today's report highlights a key trade-off the government has to make

00:35between appeasing bond markets and keeping MPs on side.

00:38Raising income tax would break one of Labour's manifesto promises,

00:42so it would be a politically toxic and controversial move to make.

00:46However, it would raise a significant amount of money for the Treasury,

00:50but dropping it creates more uncertainty for investors ahead of the budget

00:54and investors don't like uncertainty.

00:57Strap in, folks. The run-up to the budget could be bumpy for UK assets.