Archive

November 26, 2025
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UK Backloads A Tax Trap

  • The UK’s fiscal hole was even smaller than we thought (£6bn), allowing the government to backload a fiscal tightening that is unsurprisingly focused on tax increases.
  • Delaying prudence to an election year is implausible. There will be a substantial deficit in 2029-30, not the current budget surplus in the OBR forecasts based on existing policy.
  • Labour is setting up a tax trap for Reform and the Conservatives to say how they’d avoid tax increases, similar to the backloaded spending cuts they myopically ignored in 2024.

By Philip Rush

November 24, 2025
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UK Labour Party: Damned If They Do…

  • Whatever Rachel Reeves comes up with in her 26 November budget, she is bound to run into criticism from within her own parliamentary party.
  • Bond markets seem set to react badly to this, especially if it seems likely that her overall objectives will be undermined by internal resistance to proposed measures.
  • She and the PM will probably survive this, but a market-unsettling change and slide to the left look increasingly likely by mid-2026, followed by defeat at the next election.

By Alastair Newton

November 21, 2025
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HEW: Micro Risk Off

  • Risk assets have suffered, despite decent Nvidia results suggesting AI demand hasn’t turned yet, and the macro data remaining resilient. Fears are more theme-specific.
  • US labour market activity entered the shutdown solidly, and low jobless claims suggest it survived fine. Meanwhile, UK inflation only lost a little excess, and our forecast rose.
  • Next week’s UK Budget is the lowlight of our week, but it may struggle to live up to all the noisy hype. Sneaky backloaded tax hikes will close the latest forecast hole again.

By Philip Rush

November 20, 2025
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US: Resilient Into Shutdown

  • US payroll data revealed resilience going into the US government shutdown, with jobs growth the strongest since April and annualising to a pace capable of plateauing growth.
  • Surging labour force participation drove unemployment up in the least disappointing way, with the employment to population ratio making a contradictory improvement.
  • Jobless claims suggest stability into the shutdown’s end, besides noisy federal claims. The FOMC may not get the evidence it needs to cut again in December. It may not exist.

By Philip Rush

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