When I founded my firm three years ago, I reflexively merged my work and personal life related events into one single calendar.
I now mark upcoming macroeconomic events with the same fervour as, say, a big game.
So, my sense of anticipation perked up when I scanned my entries over the next few weeks.
Two entries on November 26th, written just as I see them now, stood side-by-side:
RR speaks | Stranger Things Finale
The latter is a plan for our household to binge-watch the series finale.
The former, ‘RR speaks,’ is my shorthand for the day Rachel Reeves, the UK’s Chancellor, presents her highly anticipated Autumn Budget.
And its uncanny; because what Rachel Reeves is poised to do – raise taxes – in the current global political landscape, undoubtedly qualifies as a ‘stranger thing’.
The lead-up to the Autumn Budget on Nov 26th indicates the Labour Party is preparing to break a core pre-election promise: not to raise ANY of National Insurance, Income Tax, or VAT.
While politically bruising, this pivot reveals a harsh confrontation with the UK’s fiscal reality.
If Reeves does commit to a path of fiscal discipline, the likely outcome would be a richer gilt, meaning higher gilt prices and lower yields [See image: while not the gilts, that record bid for the UK inflation-linked bonds indicate that the bond market believes Reeve’s will follow through and raise taxes]
And that matters because the lower gilt yields directly translate to a lower cost of servicing the UK’s massive public debt. A cost that currently consumes a staggering 8.3% of all public spending.
For context, that’s more than what is spent on many core public services. This debt-servicing cost is the bane of most developed nations today. (Across the channel, France, has seen five prime ministers since 2022, each facing a firestorm simply for trying to present a fiscally responsible, slimmed-down budget).
So yeah, come 26th Nov, my household will be immersed in a fictional ‘Upside Down 😀.’ Meanwhile, the UK Chancellor will be attempting to invert the UK’s own economic reality: using short-term political pain for potential long-term fiscal gain, where the very act of restoring confidence could make the debt burden itself more manageable.
One is a finale, the other feels like the start of a new, and much more difficult, season.
