Chancellor John Healey’s first Budget prompted only a limited reaction in gilts, equities and sterling, as investment professionals said the statement had met markets’ demand for fiscal restraint.
The Budget was Healey’s first since becoming chancellor under prime minister Andy Burnham and followed a volatile period for UK gilts after Rachel Reeves’s October 2024 Budget. The Office for Budget Responsibility also downgraded its growth forecast for next year and said it did not expect inflation to return to target until 2028.
Here’s how investment and financial planning experts reacted to Healey’s first Budget.
Isio’s Jones: ‘This has been a relatively uneventful Budget’
Barry Jones, chief investment officer at Isio, said gilts and equities barely moved after the Budget, with the 10-year yield holding at around 5.3%, the FTSE 100 and FTSE 250 up about 0.2% and sterling flat at $1.33. Bank shares stood out, rising around 3–4% despite an additional tax surcharge, which Jones said may reflect relief that the increase is temporary.
“Overall, this has been a relatively uneventful Budget from an investment perspective. While individual sectors have responded to specific measures, the broader market reaction has been limited and we’ve seen nothing so far that would warrant significant changes to investment portfolios,” he added.
Guinness’s Veysey: ‘The boring Budget that bond markets demanded’
Craig Veysey, portfolio manager on the Guinness Global Dynamic Bond fund, sees good value in gilts, which have lagged other core bond markets, with investors now turning to next week’s Bank of England meeting, where a 25bp rate rise is expected.
“This was the boring Budget that bond markets demanded after a particularly challenging period for gilts. There were no large unfunded giveaways, which is exactly what gilt investors had hoped for,” Veysey added.
“Healey started on the right track by setting out the constraints: elevated energy and gas prices, their impact on inflation and the extra cost of government borrowing through higher interest payments. In doing so, he set out his stall for a cautious Budget.”
Jupiter’s Davies: ‘Even more difficult decisions remain’
Huw Davies, investment manager for global macro solutions at Jupiter Asset Management, noted that Healey was keen to avoid a repeat of the poor market and media reaction to Rachel Reeves’s October 2024 Budget. He added that the chancellor appears to have struck a balance between supporting households and businesses and maintaining confidence in the public finances.
“The measures leave a credible buffer against the fiscal rules, without adding significantly to borrowing or weighing materially on growth, giving markets some grounds for reassurance. The focus on France may also give UK assets breathing space,” he said.
“But that would not remove the need for a convincing plan to improve the UK’s medium-term fiscal position, alongside a more sustained upswing in growth. Even more difficult decisions remain into the end of this parliament.”
Quilter’s Rees: ‘The UK faces a tricky backdrop’
Kit Rees, investment strategist at Quilter, said higher debt interest costs and borrowing above Spring Statement forecasts have cut the chancellor’s headroom from £24bn to £15bn, according to the OBR. With the OBR downgrading next year’s growth forecast and not expecting inflation to return to target until 2028, Rees warned that 2027 is “shaping up to be a difficult year”.
“Healey has delivered his inaugural Budget and, judging by the tempered reaction in sterling and gilts, his statement has done its job to placate markets looking for evidence of fiscal credibility. Indeed, Healey made fiscal discipline the primary feature of his speech, stating that this will underpin all the decisions he takes as chancellor, in a bid to calm markets ahead of potential options for higher spending down the line,” Rees added.
“Still, despite this resoluteness from the Treasury, the UK faces a tricky backdrop. The Iran war and ensuing rise in oil prices have stoked inflationary pressures, with rising bets that the Bank of England will raise interest rates pushing gilt yields higher.”
RBC Brewin Dolphin’s Foster: ‘There are still important decisions to make’
Guy Foster, chief strategist at RBC Brewin Dolphin, said compliance with the fiscal rules keeps the UK’s public finances “on a sound footing” and on a more stable path than those of some other large economies. However, he warned that the cut in headroom lowers the chance of meeting the fiscal targets from 59% to 56%, leaving little resilience against further economic shocks.
“Polling suggests that consumers are concerned about the public finances and that they are spending less as a result. Addressing those concerns would create positive reinforcement, and the government has announced a range of individual measures designed to ease cost of living pressures,” he added.
“However, there are still important decisions to make over the course of the Parliament to establish the best path to higher economic growth which will help the country outgrow the debt burden.”
Evelyn Partners’ Hollands: ‘The tax treatment of savings is becoming less favourable’
Jason Hollands, managing director at wealth management firm Evelyn Partners, pointed to the chancellor scrapping plans to cut the annual Cash ISA allowance for under-65s, while doubling the planned rise in tax on savings income from two percentage points to four. From April 2027, the tax rates on savings income are set to rise to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers.
“Keeping the £20,000 Cash ISA gives savers more scope to protect their interest from tax at a time when the tax treatment of savings is becoming less favourable,” he said.
“Incoming higher tax on savings interest and already implemented recent increases in tax on dividends and capital gains underline the importance of making as much use of ISAs as possible whether you are a saver or an investor.”
AJ Bell’s Coles: ‘Millions will remain at the mercy of fiscal drag’
Sarah Coles, head of personal finance at AJ Bell, said it was disappointing that Healey did not halt the changes to inheritance tax on pensions, which she warned will create “fiendish complexity” and delays when settling estates. She also said anyone hoping for action on the frozen personal allowance, after Andy Burnham promised to look at it, will be disappointed that the pledge has so far come to nothing.
“The fact that Healey didn’t address the personal allowance for anyone other than low-income pensioners means millions will remain at the mercy of fiscal drag, where each pay rise pushes more people into higher tax brackets,” she added.
“The number of income taxpayers has soared to an estimated 40.8 million in the current tax year, while the number of higher rate income taxpayers has hit 7.7 million, an increase of more than 1 million in the past two years alone – and 1.3 million people are expected to pay tax at the top rate of 45%.”