Digest opened free editor

Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.

Analysts have warned that the decrease in borrowing costs gave the UK Chancellor Rachel Reeves a greater space for maneuver because she is trying to maintain its narrow financial rules, but public financial resources are still being exposed to the country’s deteriorating expectations.

The UK government bonds have wiped the largest part of their losses since the Reeves budget in October, which made the long -term borrowing costs close to the level they maintained before its tax plans and spending in the gilded market were accelerated.

Doctrine revenues decreased for ten years, which are inversely transmitted to prices, by 4.44 percent on Friday, less than the highest level last month by 4.93 percent and near the pre -budget level of 4.32 percent.

but Destious expectations This week from the Bank of England, which has passed to the estimation of its growth for 2025 in half, indicates that the government will struggle to drop the borrowing quickly in the coming years.

“He explains how quickly the mood music changes,” said Nick Hayes, head of fixed income in Axa Investment managers. “Not so long ago, Gilts was in” the perishing ring. “The yield was heading to 5 percent.”

Emissiness in Gilts This is due to a mixture of global bond pools and the possibility of reducing interest rates faster by the Bank of England, which announced the reduction of a quarter of a point on Thursday, amid signs of falling economic growth and reduced inflation.

The market step has provided comfort for Refiz While trying to maintain its financial rule imposed on it, daily spending is covered with tax receipts.

The budget responsibility office, the UK’s financial agency, said that its chancellor has 9.9 billion pounds of the foreground – the reserve margin against its fiscal rule.

The subsequent height of the doctrine revenue led to the economy to warn that this is a slender room for maneuver-a third lower since 2010-has been eliminated at high borrowing costs.

Andrew Godwin in Oxford estimates the economy that due to the doctrine of the doctrine of the market, Reeves now has about 5 billion pounds in the financial front, and half of October, but better than the negative position in the depths of the sale of January.

However, he warned that the additional range has acquired “Reeves” compared to what could happen if [the OBR] It changes the predictions of its growth or profits. ”

He added: “It was a great risk to leave a very large space to start, and this danger has crystallized.”

Many fund managers have a similar analysis and argue that more discounts are needed in spending or tax increase to enhance the financial situation in the United Kingdom.

Economists say that if I put OBR, an economic prediction is similar to BOE estimates for this week, then that will be so. Add to pressure on public financial affairsBecause of the low growth in tax revenues.

BOE now expects GDP to grow only 0.75 percent this year, before it reaches 2026 and 2027, while unemployment may rise to 4.75 percent.

It has also become more pessimistic about the rate at which the British economy can grow without increasing inflation.

On its annual shares on the offer of the economy, the central bank said that the potential growth rate of the United Kingdom – is often described as a “speed limit” on the growth of the sustainable gross domestic product – slowed down to 0.75 percent only by the beginning of 2025, to the bottom of 1.5 in The hundred in the previous year.

The Bank of England said it expected the possible growth in the subsequent years, leaving its expectations by 1.5 percent.

Huw Pill, the Senior Economist at the Bank of England, said on Friday that the bank was not in a position in which we could announce the job “when it comes to inflation, because they insisted that they would not rush to low rates.

“There is still a need to maintain some restrictions in the position of monetary policy,” he said, adding that the growth of higher wages from expected was a caution when it came to more price discounts.

Some economists expect that OBR may eventually have to reduce its expectations for potential growth in view of the constantly disappointed performance of the UK’s productivity in recent years.

This would deal with a dangerous blow to public financial resources, because OBR expectations are the basis of government budget plans.

“The discounts to possible growth predictions” will have “really significant effects on Rachel Reeves’s room.”

He added that the counselor “will hope” that obr does not decide to conduct such a classification.