- Markets were unmoved by the restrained suite of policies introduced in the Spring Budget
- But history tells us that taxes tend to increase after an election – and bond markets will be watching the next government closely
Gilts and sterling were largely unmoved by the Spring Budget – and the economy probably will be, too. Chancellor Jeremy Hunt may claim to be ‘delivering’ on his plan for growth, but economists are unconvinced. Analysts at Pantheon Macroeconomics expect the new measures to add a measly 0.1 percentage points to growth over the next year.
Others point out that the Budget did very little to address more significant issues facing the UK economy. Following the announcement, Michael Kitson, associate professor in international macroeconomics at Cambridge Judge Business School, said that although the headline 2p cut to national insurance may give consumers a brief ‘sugar rush’, “it will do little to rectify the long-term structural problems in the UK”.