Chancellor Rachel Reeves’ Budget was hotly anticipated, although much of the furore was taken away from leaks around an hour before the speech.
There were plenty of policies for experts to sink their teeth into, from salary sacrifice changes to the extension of income tax thresholds.
While you can read a full summary of everything you need to know here, below Trustnet rounds up some of the strongest reactions to a busy Wednesday afternoon.
Taking some pain to avoid becoming the pantomime villain next year
Before the Budget had even begun, leaks from the OBR caused a furore. Laith Khalaf, head of investment analysis at AJ Bell, said: “This Budget was a bit like watching Match of the Day when you already know the scores” as so many polices were leaked in advance.
Overall, he said Reeves used the Budget to raise taxes, increase spending and build up a higher level of headroom against her fiscal rules.
“The decision to use taxation to increase her fiscal headroom means the chancellor is taking some pain at this Budget in the hope that she won’t have to play the pantomime villain next year. Let’s hope that proves to be the case, but the odds haven’t shifted that far in her favour,” he said.
Kicking the can down the road
Many of Reeves’ biggest decisions were to extend thresholds already in place, such as income tax, which was pushed back a further three years to 2031.
Meanwhile, new policies coming into effect are slated to start either in 2028 or 2029, meaning there is still some time before the government will begin to rake in additional cash.
David Zahn, head of European fixed income at Franklin Templeton Fixed Income, said: “This approach effectively kicks the can down the road until the next parliamentary election to deal with the spending gap. The probability that those tax changes are delivered seems low given it will be a new parliament, potentially with a different majority party.”
Investors were reassured
After a lot of speculation, Tom Stevenson, investment director at Fidelity International, said markets were looking to be reassured by the chancellor, who needed to tread a careful line between raising money and not diminishing the Labour party’s already poor public perception.
“Investors were looking for reassurance today - that the Chancellor had rebuilt a prudent level of fiscal headroom, that tax rises would be balanced by some spending restraint and that the government would not need to borrow significantly more,” he said.
“All in all, the chancellor can feel relieved about the market reaction to her second Budget. The steadiness of the market response suggests that investors were reassured by the overall fiscal approach.”
The best thing about the Budget is that it is over
Uncertainty ahead of the Budget was damaging business and investor confidence, said Fred Soneya, co-founder at Haatch, who noted that “the best thing we can say about this Budget is that it's over”.
The “stale environment” that follows a Budget should give businesses confidence to invest and move forward, allowing them to plan “with more clarity”.
“Uncertainty creates anxiety, which stifles innovation and hinders growth,” he said.
However, he said there “isn’t much to celebrate”, as there were no reductions to corporation tax, national insurance and business rates, something that “business leaders would have loved to see”.
Another missed opportunity
Oliver Jones, head of asset allocation at Rathbones, said the Budget was "another missed opportunity to address the structural causes of UK’s tough fiscal situation by prioritising economic growth and investment", instead focusing on raising revenue through higher taxes – in particular changes to the pension salary sacrifice rules.
However, there could be more pain to come in the future, Jones warned as the chancellor “may not even be out of the woods, with regards to her fiscal headroom”.
The £22bn she stated as achievable in the Budget is “still less than the average headroom chancellors have historically maintained against their fiscal rules, in an era of heightened economic volatility,” he said.
“And Rachel Reeves has repeated the old trick of announcing tightening measures which are heavily backdated and will not make any difference in the short term, like the decision to keep income tax thresholds frozen for three more years, which was the largest single revenue-raiser.”