Reeves blames Tories and sets Budget for October

Chancellor of the Exchequer Rachel Reeves hit the ground running yesterday by delivering bad news for taxpayers, as she heaped blame on the Tories for being left a dire fiscal inheritance.

In just over 3 weeks into the job, the chancellor has hinted at further tax rises for the upcoming budget set for October 30th using a ￡21.9 billion spending black hole as ammunition.

Former Chancellor Jeremy Hunt now in opposition to Reeves, slaughtered her decision to scrap winter fuel payments for Pensioners and refused to accept the figures touted calling her plans “ a betrayal to the public” after being left a growing economy with inflation on target. Reeves plans include a pay rise for public sector workers above inflation, seeing junior doctor receive a monster 22% on average, to avoid further strike action.

The Bank of England is now expected to introduce its first easing of policy since the pandemic in 2020, as we approach it’s base rate decision this Thursday. However, markets remain uncertain on whether Governor Bailey and his committee will go a reduction given the sticky services inflation which remains high.

Worth noting that Bailey has been notoriously quiet as his silence fuels debate the Old Lady could act ahead of the FED with a cut. Were the Bank of England to proceed it could be the start of back-to-back reductions to stimulate the housing market and provide relief for many homeowners.

Tomorrow evening sees the Federal Reserve bank make their decision on base rates, which have held steady in the current 5.25-5.5% range since last July. With fears of recession not occurring and inflation falling there is scope for the FED to lay the path ahead for rate cuts, with some economists predicting Chair Powell could even go ahead with a 50 basis point cut for September.

The Bank of Japan looks to emerge itself from decades of deflation with an interest rate hike to 0.2% tomorrow also, as the lure of foreign investment leads to better earnings for Banks supporting stock prices.

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