UK borrowing costs rise sharply after significant tax hikes in budget
Summary: U.K. borrowing costs rose sharply on Wednesday after Finance Minister Rachel Reeves announced significant tax hikes in her first budget. The yield on 10-year government bonds increased by 7 basis points, reaching its highest level since July.
The budget includes £40 billion in tax increases to address public finance issues and aims for a day-to-day spending surplus. The Treasury also plans to raise gilt issuance by £22.2 billion to meet financing needs.
Market reactions were more stable compared to previous years, despite the higher borrowing. Analysts noted that lower inflation and prior policy announcements contributed to a calmer response from investors.
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