'This was a do-no-harm Budget to buy time for Labour to prepare for an early general election,' said Mike Bell, head of market strategy at RBC BlueBay.
While the immediate market reaction to Chancellor John Healey's maiden Budget today (28 October) has been muted, analysts, economists and fund managers have expressed concern it did little to address the deep fiscal challenges facing the UK.
Mike Bell, head of market strategy at RBC BlueBay, said the measures unveiled today do little to solve the economic problems facing the UK, but Healey's effort to stick to the fiscal rules may give the government time to pursue "more radical surgery" in the future.
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Bell continued: "This was a do-no-harm Budget to buy time for Labour to prepare for an early general election. Burnham wants to deliver radical change but cannot do so without dropping Starmer's manifesto commitments.
"Today's measures do not solve the problems facing the country or materially reduce the long-term fiscal concerns which are predominantly driven by an ageing population and the resulting higher healthcare and state pension spending requirements."
Tony Dalwood, chief executive of Gresham House, was more critical, suggesting the frequent tweaks and changes to existing tax legislation announced in the last few Budgets are having a negative effect on investor confidence.
"The government should try to minimise interference in the free market to those areas where economics shows it does not work," he said.
"Every tax on business is an intervention: it reallocates resources and pulls capital away from where it would be most productive. The risk of unintended consequences is well evidenced."
Dalwood particularly emphasised the potential impact of the government's decision to temporarily double the Bank Corporation Tax Surcharge from 3% to 6%, though this hike was lower than the possible upper range speculated before the Budget.
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"Banks back British businesses, and the government should be backing them in return, not taxing them harder. The same goes for growth companies that win on the global stage," he explained.
"If the chancellor wants growth, he needs to reward long-term investors and entrepreneurs. Without that, there will be nothing left to tax."
However, Sue Noffke, manager of the Schroder Income Growth fund, said the outcome for UK equities was fairly neutral, balanced between higher investment and the cost of taxes in some sectors.
Spending commitments on infrastructure, defence, AI and energy could create opportunities for UK-listed companies, she noted, while the Budget also managed to avoid a broad increase in the corporate tax burden – though the hike in the bank surcharge was "unwelcome".
"Ultimately, UK companies need policy stability and confidence to invest. This Budget contains some targeted tax increases, but its emphasis on investment and easing costs for households and businesses makes it a relatively measured outcome for UK equities. The test now is whether that translates into stronger investment and growth."
Noffke's colleague James Bilson, global fixed income strategist at Schroders, said the "uneventful" Budget was "exactly what the bond market wanted to see".
"We have recently seen with other countries, such as France, the perils of the market losing confidence in the fiscal outlook, and the chancellor's statement today will help the UK avoid this fate," he said.
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However, the outlook heading into 2027 "remains challenging", with fiscal plans relying on politically fraught real-terms spending cuts in certain government departments. This will be addressed at next year's Spending Review.
Beyond the macroeconomic outlook, wealth experts hailed several of the measures in the Budget as steps in the right direction.
Chief among these were the reversal of the decision to cut the tax-free Cash ISA allowance, as well as the introduction of a 10% lifetime "founders' relief" on capital gains tax for entrepreneurs who sell their business assets.
Jason Hollands, managing director at Evelyn Partners, noted, however, that the planned increase in tax on savings income from next April will be doubled, from two percentage points to four.
He said: "The message for savers is clear: the tax landscape is set to become tougher in the foreseeable future. For many households, a rising tax bill is another cost-of-living pressure.
"This underlines the importance of making effective use of available allowances, including ISAs and pensions, and seeking sound financial planning advice to navigate the changes ahead."
