Heads up: UK fiscal statement to be announced later today | Forexlive

After the whole ‘mini-budget’ fiasco, which culminated in Liz Truss losing her position as prime minister, we are now seeing calmer tones in UK politics but not necessarily that much for the better. The fiscal statement today will be a stark contrast to Trussnomics as UK chancellor, Jeremy Hunt, will unveil a package of tax rises and spending cuts instead.

It is going to be one that will further increase the burdens on households as the government tries to move in-line with the BOE in order to try and find a solution to the inflation problem – which surged to 11% in October, its highest in over 40 years.

Hunt’s package is expected to see around £35 billion in tax increases alongside public spending cuts of around £20-25 billion.

For markets, there shouldn’t be much to really get too jumpy. After Truss and Kwarteng’s lack of finesse in September, there should not be much surprises today as Sunak and Hunt will want to play their hands as straightforward as can be.

The fact that the OBR forecasts will be published also is a big help to Hunt’s cause, as more and more worries are mounting over the sustainability of UK public finances. The fact that the bank rate has risen also isn’t helping as that means the government has to pay more in interest on the debt it has outstanding – that also eats into the borrowing costs.

As such, I won’t expect Hunt to ignore the “fiscal hole” estimated by the HMT and work with a budget along the lines of £55-60 billion per year. Anything more would just invite questions and that could see markets perhaps get a little uneasy.