Pound Weakens, Stocks Fall, and Government Borrowing Costs Rise in Budget Market Reaction

Government borrowing costs hit their highest level in over a year, in what analysts said was a sign that markets are responding negatively to the increases in spending announced in Wednesday’s Budget. The FTSE 100 also fell and sterling weakened against the dollar and the euro, after Chancellor of the Exchequer Rachel Reeves unveiled plans that will see state spending increase by £70 billion a year, funded by increases in taxes and borrowing. The yield—or interest rate the Exchequer pays on its debt—on a 10-year government bond hit 4.568 percent on Thursday afternoon, the highest point since August 2023. Yields on government bonds, also known as gilts, had already moved higher on Wednesday, after Reeves announced her spending and tax plans....