Live, rolling coverage of business, economics and financial markets as investors weigh implications of Rachel Reeves’s budget

The UK government’s increased borrowing will give an “additional challenge” to the public finances, according to influential ratings agency Moody’s.

UK gilt yields, effectively the price at which the government can borrow, rose to their highest level this year on Thursday afternoon as markets responded to Rachel Reeves’s budget – the first by a Labour government in 14 years. Investors were responding particularly to the prospect of about £28bn in extra borrowing.

In our view, the increase in borrowing, which is in part supported by a new measure of debt under the fiscal framework, will pose an additional challenge for what are already difficult fiscal consolidation prospects. […]

Furthermore, the extent to which new investment spending can raise growth potential will be limited unless structural constraints are durably addressed which will prove difficult.

The main impact of the stamp duty changes is likely to be on the timing of property transactions, as purchasers aim to ensure their house purchases complete before the tax change takes effect.

This will lead to a jump in transactions in the first three months of 2025 (especially March), and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes.