Word on the Street #348 UK Budget wobbles
Nov 19, 2025
Sean Markowicz, a markets expert and analyst at Barclays, joins to dissect the current UK budget jitters. He discusses the shocking spike in gilt yields and the impacts of potential income tax rises. Markowicz also digs into US market volatility, attributing recent pullbacks to profit-taking and shifts in tech investments. With insights on layoffs and evolving job norms, he warns about interpreting noisy labor data and cautions against knee-jerk reactions to upcoming numbers. It's a rollercoaster of fiscal insights and market predictions!
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UK Tax Signal Shook Markets
- Markets reacted strongly when the Chancellor suggested income tax might not rise, surprising many given prior signalling.
- That raised big questions about credibility of revenue measures and pushed gilt yields higher due to changed wage expectations.
Income Tax Hits Revenue Efficiently
- Income tax increases raise large revenue with limited behavioural responses, unlike capital or council tax changes.
- Alternatives to income tax are likely more backloaded and give individuals scope to change behaviour, weakening immediate revenue credibility.
Reduce Exposure Before Budget Details
- Take chips off the table and sit on the sidelines until the UK Budget details are released.
- Wait for clearer policy signals before re-entering UK risk exposure given widened outcome tails.