UK chancellor avoids a 'Liz Truss moment'

The overall moves are modest in comparison to the 'mini-budget' debacle in 2022

Rachel Reeves appears to have just about assuaged markets and pulled off a substantial upfront fiscal expansion by tying herself to more binding timelines on her fiscal rules in the medium term. 

The market reaction to last week’s UK Autumn Budget suggests investor appetite has been tested by the scale of spending planned by the chancellor Rachel Reeves in the next few years. 

However, this was far from a “Liz Truss moment” which led to a plunge in gilts and sterling in Autumn 2022. The headline budget measures were a major £40bn tax-raising package and a sharp increase in infrastructure spending, underpinned by a change in the fiscal rules which provide significantly more borrowing headroom for the chancellor to invest.