Having developed a name for himself as the pandemic era Chancellor, Rishi Sunak had attracted a reputation of going above and beyond to provide economic support to an ailing economy – for better or for worse will remain your decision. Policies created in the face of the pandemic, not least the landmark furlough program, cost billions of Pounds to finance and were designed to support and preserve consumption within the UK economy. The stance and consequent reputation of this Chancellor during the normalisation phase is still being decided.
Moving into yesterday’s mini budget, the market was expecting more than had been alluded to by the Chancellor to date. On Tuesday, public borrowing statistics showed space capacity within budgetary forecasts in excess of £20bn and on the morning of the budget speech, inflation was recorded at 6.2%, outpacing expectations of 5.9% and a January figure of 5.5%. This had created an image of a UK economy with spare capacity within its budget in addition to a rapidly rising cost of living that was leading to the expectation that the Chancellor could go further on the fiscal front to protect the UK economy from rising macroeconomic risks.
If you recall, the incumbent Chancellor also landed himself in hot water with the Chair and his own party for revealing details of his latest budget to the public ahead of its presentation to the House of Commons. In violation of protocol, the Chancellor faced backlash in the Chamber for his failure to allow parliamentarians first scrutiny and hearing over the proposed governmental budget. This history also led to the expectation that the Chancellor may go further than the public and markets alike had currently been let onto, saving the key aspects of his spring budget for the House.
There was more provided during the budget announcement than previously indicated. However, the announcement did not satisfy many expectations for an ultra-fiscally profligate budget which limited any significant Sterling gains yesterday. Most Sterling crosses closed in the red yesterday reflecting the underwhelming budget.
The chancellor did make caveats to his planned National Insurance increase, notably raising the threshold at which NI contributions begin by £3,000 and promising to cut the basic rate of income tax to 19% from 20% by the end of the parliament. Overall the budget in the face of adversity for the British consumer showed that No.11 must be concerned about interest repayments set to balloon and the headroom of future fiscal policy.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Fujairah
Humphrey Percy
Fri 22 May 2026
Fujairah For those readers who are less familiar with the Emirate states that make up the UAE, Fujairah, and Ras Al Khaimah are the less glamorous relations of Dubai and Abu Dhabi with low-cost housing, largely immigrant labour accommodation and heavy industry rather than swanky lifestyle and up market shopping malls. With the new oil […]
Daily Brief – Mariannes
Humphrey Percy
Wed 27 May 2026
Mariannes In addition to gold coins such as South African Krugerrands, Canadian Maple Leafs, and American Gold Eagles, from June 16 you will once again be able to buy French Mariannes. The last time France minted gold coins was mostly in the Napoleonic era and appropriately they were called Napoleons and were issued between 1803 […]
Daily Brief – EU capital markets
Humphrey Percy
Mon 1 Jun 2026
EU capital markets As we have written before, for the EUR to become a global reserve currency requires a number of pre-conditions which largely stem from the establishment of an integrated EU Capital Market. Brussels is accused of dragging its feet if not actually being obstructive so the 6 largest countries have banded together to […]
