LONDON, March 11 (Reuters) - British finance minister Rishi Sunak on Wednesday announced a 30-billion pound spending splurge in his maiden budget, pledging to do “whatever it takes” to support the economy,
The budget, however, failed to surprise markets as it came just hours after the Bank of England delivered a shock 50 basis-point rate cut. Government budgetary stimulus was widely expected.
Sterling inched up to a session high of $1.2958, though it had already rebounded before the budget from an early low of $1.2830 .
Here of some views from analysts:
Sarah Carlson, a Moodys Senior Vice President: “The fiscal stimulus announced by Chancellor Rishi Sunak in today’s budget should help to support economic growth given the economic headwinds created by COVID-19, but the resulting deterioration in the UK’s fiscal position highlights the sovereign’s ongoing difficulty in meaningfully reducing the UK’s gross general government debt burden from its current high levels.” Derek Halpenny, Head of Research, Global Markets EMEA, MUFG: “There was clearly a greater surprise element to the BoE rate cut than the details of the budget. The more favourable growth-friendly measures in the budget, while welcomed by the markets contained no big-bang shock to shift expectations on growth and hence the response of the pound has been modest.” Rupert Thompson, Chief Investment Officer at Kingswood, said: “The Budget contained a range of measures totalling £30 billion or 1.4% of GDP aimed at propping up the economy in the face of the coming hit from the coronavirus. This follows the move by the Bank of England this morning to cut interest rates and boost bank lending to businesses. Together, these various fiscal and monetary measures amount to a significant stimulus. Even so, it is far from clear if they will be sufficient to prevent the economy dipping into recession over coming months – not least because today’s numbers showed GDP growth grinding to a halt at the start of the year even before the threat from the coronavirus had become apparent.”
Reporting by London markets team Editing by Tommy Reggiori Wilkes