British finance minister John Healey’s first budget passed with barely a ripple in financial markets, a contrast with the leaks of sensitive details, U-turns and jitters for bond investors that marked the run-up to his predecessor’s budget a year ago.
Gilts ended Wednesday’s trading session little changed after the announcement of a budget that offered help to households and motorists hit by rising global energy costs while raising taxes on banks, although a report on those plans moved bank shares before Healey spoke.
In a sign of how closely he had managed expectations, Healey’s plans entailed £112 billion ($149 billion) of borrowing for the current financial year, exactly matching the forecast of primary dealers in a Reuters poll published last week.
Planned issuance of British government bonds for 2026/27 was £250.6 billion, just £1 billion above the dealers’ consensus.
“Judging by the tempered reaction in sterling and gilts, his statement has done its job to placate markets looking for evidence of fiscal credibility,” said Kit Rees, investment strategist at Quilter.
NO REPEAT OF 2025 BUDGET RUN-UP
The calm was a marked departure from the run-up to Rachel Reeves’s November 2025 budget.
Reeves used a speech in the run-up to the event to prepare voters and markets for what appeared likely to be a politically difficult rise in income tax rates.
But a Financial Times report days later said she had abandoned the plan, prompting a sell-off in gilts as investors questioned the government’s fiscal room for manoeuvre and the coherence of its strategy.
The turmoil deepened on budget day, when the Office for Budget Responsibility inadvertently made its economic and fiscal forecast accessible online before Reeves had delivered her statement to parliament, something Reuters was first to report.
One person familiar with the budget preparations this year said Healey had been determined to make a clean break.
“John took the decision to bring the budget date forward, and brought in military-style compartments to prevent uncertainty and speculation,” the person said, referring to ring-fenced groups of officials who are only allowed to see the details of a particular policy.
“He was personally determined to ensure this went smoothly and held the department to account on it,” the person said, adding the Treasury had upgraded its IT systems so that protected policy measures were accessible only to those inside the compartment.
BANK TAX MEASURES LEAKED
Healey’s budget was not leak-free, however.
Meg Hillier, who chairs parliament’s Treasury Committee, wrote to the finance ministry and the Financial Conduct Authority on Wednesday after Bloomberg reported that Healey would raise taxes on banks by less than feared, boosting bank share prices.
“I would welcome your confirmation that the Department is undertaking work to understand what happened in this case,” Hillier wrote.
“I would also welcome confirmation that banks (or any representatives of them or their trade bodies) were not told of the changes in outline or with specifics before the publication of the budget and the chancellor’s statement to the House (of Commons),” she added.
A Treasury spokesperson said: “We do not comment on budget speculation.”
Nor did the finance ministry drop its practice of handing some newspapers exclusive early access to embargoed announcements in the run-up to the budget, a strategy designed to build public interest but one that gives select outlets an advantage.
The Treasury did not respond to questions about the practice or about what it had changed since last year’s budget.
($1 = 0.7503 pounds)
(Editing by Toby Chopra)
