Summer Budget 2015 cuts to the surprise factor
Our overall assessment of this Budget is that it was woefully short on surprises. Pretty much everything that was announced by Osborne today was well-signalled […]
Our overall assessment of this Budget is that it was woefully short on surprises. Pretty much everything that was announced by Osborne today was well-signalled […]
Our overall assessment of this Budget is that it was woefully short on surprises. Pretty much everything that was announced by Osborne today was well-signalled in advance. “Shocks” were only minor, and, apart from a few sectors, the market shrugged off Osborne’s fiscal plans for the years ahead.
Budget highlights:
Economic:
Tax measures:
Spending:
Analysis:
Overall, this Budget was focused on tightening the fiscal screws and bringing down the UK’s deficit. Osborne and co. have a mountain to climb to reach a GBP11 bn surplus in the first year of the next Parliament, currently the UK’s deficit stands at over GBP 60 bn.
Giveaways were limited, and generally well-signalled in advance. Banks and homebuilders seem to be the most disappointed from this Budget:
The market reaction has been limited, as we mentioned above the FTSE 100 has backed off its highs, although it is still higher on the day, in line with other European indices. Sterling has barely changed on the back of the budget and overall we think that this Summer Budget is basically GBP neutral. The pound has been falling pretty much consistently since the 18th June, which has nothing to do with George Osborne and more to do with declining expectations of a UK rate rise this year. The break through the 200-day sma at 1.5439 this morning, is an extremely bearish development, but this was also unrelated to the Budget, in our view.
Overall, homebuilders and banks may continue to struggle in the coming days as the impact of tax changes to this sector is priced in by the market. However, we think that Osborne will be happy that he was able to deliver his Budget while at the same time as treading lightly on UK financial markets.