Budget 2026: Relief for Chancellor John Healey as investors shrug off 'dull' statement

Budget 2026: Relief for Chancellor John Healey as investors shrug off 'dull' statement Experts say Chancellor John Healey's statement, read when delivering the Budget, served its purpose "to placate markets looking for evidence of fiscal credibility" Financial markets took the Budget in their stride, with government costs remaining steady. Chancellor John Healey will have been desperate to avoid any tax hikes or spending plans that risked spooking bond markets, on which the government depends on to balance the books. Gilt yields - the interest rate the government pays on new debt - were largely unchanged after the Budget. That was despite the Office for Budget Responsibility warning higher inflation would mean the government borrowing costs would be £14billion a year higher this parliament. The watchdog has cut its growth forecasts for the UK for next year because of the expected ongoing fallout from the Middle East war. The Chancellor also warned the government fiscal headroom would be slashed from £24bn to £15bn by the end of the decade. Stay up to date with everything announced in our Budget 2026 live coverage. Matthew Ryan, head of market strategy at global financial services firm Ebury, said: “Sterling and gilts have taken it in their stride, but with only a thin buffer, both remain exposed to weaker growth or a further rise in global borrowing costs. The can has been kicked, but the road is getting shorter.” Kit Rees, investment strategist at Quilter, said: “John Healey has delivered his inaugural budget and, judging by the tempered reaction in sterling and gilts, his statement has done its job to placate markets looking for evidence of fiscal credibility. “Indeed, Healey made fiscal discipline the primary feature of his speech, stating that this will underpin all the decisions he takes as Chancellor, in a bid to calm markets ahead of potential options for higher spending down the line. “Still, despite this resoluteness from the Treasury, the UK faces a tricky backdrop. The Iran war and ensuing rise in oil prices have stoked inflationary pressures, with rising bets that the Bank of England will raise interest rates pushing gilt yields higher.” Matthew Amis, investment director at financial firm Aberdeen said; “The gilt market wanted dull and they got exactly that. With oil and gas prices this high and with one eye on France, a dull Budget is what was needed. “All of the major obstacles presented to Chancellor Healey were avoided, as such gilts yields are slightly out-performing.”