The UK Budget Office (OBR) said on Wednesday that long -term financial expectations in the United Kingdom are still very difficult amid uncertainty surrounding the full impact of changes on social welfare policies, for each Reuters, the UK’s budget office (OBR) said on Wednesday.
Main meals
“We are now expecting 1.0 % real GDP growth this year.”
“The British economy is expected to grow by 1.9 % in 2026, 1.8 % in 2027, 1.7 % in 2028, 1.8 % in 2029.”
“OBR CPI 3.2 % in 2025 (October 2.6 %).
“OBR sees the consumer price index by 2.1 % in 2026 (October 2.3 % expectations).”
“The tax ratio to GDP is expected to increase to the highest level in the post-war GDP 37.7 % of GDP in 2027-28.”
“The high market expectations and fluctuations continue to the bank rate and the revenue of the doctrine of forming a financial view.”
“Productivity growth expectations are unconfirmed in terms of its level and the rate of growth.”
“If the growth of direction productivity and average growth persists in only 0.3 %, the current budget will be in a deficit of 1.4 % of GDP in 2029-30.”
“The current head hall is a very small margin compared to the risks and uncertainty that are inherent in any financial expectations.”
“Public spending is expected to rise to 45 % of GDP next year, before decreasing during the remaining period of the contract to 43.9 % of GDP in 2029-30.”
“The tax is expected to increase as a share of GDP from 35.3 % this year to a historical increase of 37.7 % in 2027-28 and remains at a high level for the rest of the expectations.”
Market reaction
GBP/USD remains under modest declining pressure and was seen lost 0.4 % per day at 1.2893. Meanwhile, the return of government bonds in the UK for 10 years decreases, losing about 2.5 basis points by 4.73 %, and government bonds for two years, and now remains flat per day by 4.298 %, and government bond returns are reflected for 30 years early, and rose to their highest level since mid -January by 5.407 %.
UK, the doctrine of returning to common questions
The UK’s doctrine revenue measures the annual return that the investor can expect from the contract of British government bonds or Gilts. Like other bonds, Gilts pay the benefit of their holders at regular intervals, “voucher”, followed by the full value of bonds when you deserve. The voucher has been fixed, but the return varies taking into account the changes in the price of the bond. For example, the doctrine of 100 pounds may have a voucher of 5.0 %. If the price of the doctrine decreases to 98 pounds, the voucher will remain 5.0 %, but the yield of the doctrine will rise to 5.102 % to reflect the low price.
Many factors affect the revenues of the doctrine, but the main prices are interest rates, the strength of the British economy, the liquidity of the bond market, and the value of the pound sterling. The high inflation generally weakens the prices of sect and leads to the high revenues of the sect because Gilts are long -term investments vulnerable to inflation, which leads to erosion of their value. The highest interest rates affect the current gold revenues because the newly released Gilts will carry a higher and more attractive voucher. Liquidity can be risk when there is a shortage of buyers or sellers due to panic or preference for the most dangerous assets.
Perhaps the most important factor that affects the level of doctrine revenue is interest rates. These are determined by the Bank of England to ensure price stability. The higher interest rates will raise the highest returns and reduce the price of the new Gilts because the issued Gilts will carry a higher and more attractive voucher, which reduces the demand for the oldest Gilts, which will witness a decrease in the price.
Inflation is a major factor that affects the proceeds of the doctrine because it affects the value of the manager received by the pregnant woman at the end of the term, as well as the relative value of the payment. High inflation deteriorates the value of Gilts over time, reflected in a higher return (low price). The opposite is correct from low inflation. In rare contraction, the sects may rise – and it is represented by a negative return.
Foreign Gilts are exposed to the risk of the exchange rate because Gilts are our pound. If the currency enhances investors, investors will realize higher return and vice versa if weakened. In addition, the proceeds of the doctrine are associated with the pound sterling. This is because the returns are a reflection of interest rates and interest rate expectations, which is a major engine of sterling. High interest rates, raise the newly issued voucher, and attract more global investors. Since it is pricing it in the pound, this increases the demand for the pound sterling.
