In early trading, UK bond yields reached their highest levels of the year, with the benchmark 10-year gilt yield hitting 4.526% in global trading. This level matched Thursday's peak following Reeves's budget statement, which has led investors to anticipate a slower pace of interest rate cuts from the Bank of England.
Moody's released its budget analysis, warning about the potential risks associated with Reeves's fiscal plans, describing the increased borrowing as an 'additional challenge' to managing the UK's public finances.
The rating agency noted that while the budget aims to stimulate day-to-day spending and government investment, it does little to enhance UK economic growth projections, which are expected to average only 1.7% from 2025 to 2027.
Moody's pointed out that structural issues, such as rising labor market inactivity and stagnant productivity, need to be addressed to improve the UK's economic outlook.
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