The Weekly Briefing from Capital Economics More AI bubble fears, the UK Budget countdown and Saudi Arabia’s global pivot
Nov 21, 2025
Ruth Gregory, Deputy Chief UK Economist, dissects the turbulent lead-up to the UK's autumn Budget and its potential economic impact. Jonas Goltermann, Deputy Chief Markets Economist, raises concerns over the sustainability of the AI-led stock market rally, drawing parallels to past bubbles. Meanwhile, Neil Shearing, Group Chief Economist, discusses the implications of the recent Trump-Mohammed bin Salman meeting and the shifting dynamics in US-Saudi relations amid a fracturing global economy. Expect insights on fiscal policy, market risks, and geopolitical shifts.
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Episode notes
Leaky Budget Build-Up Harms Confidence
- The long, leaky build-up to the UK budget has increased uncertainty and damaged sentiment.
- Ruth Gregory warns that floated tax kites can prompt inefficient household and business decisions.
Rebuild Fiscal Credibility First
- The Chancellor must prioritise convincing markets of fiscal discipline before other aims.
- Ruth Gregory advises raising a credible fiscal buffer to avoid higher borrowing costs and protect growth.
Soft Data Makes Big Tax Hike More Likely
- Recent soft UK data and higher borrowing make a large tax-raising autumn budget more likely.
- Gregory expects this will increase the chance the Bank of England cuts interest rates next year.
