UK: Budget has avoided political ructions - Westpac

A cautious and financially constrained Budget has avoided political ructions (so far), satisfied markets and provided enough cash support to appease public discontent, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“However, further growth downgrades highlight the vulnerabilities of the economy as Brexit realities begin to bite. May and Hammond may have secured their positions for the time being, but the need to break the deadlock of Brexit negotiations by the current 4th Dec apparent deadline, with decidedly limited financial flexibility, means that politics could again unsettle or even unseat May, her Cabinet and GBP.”

“Lower growth reflects poor productivity. Both Brexit and constrained consumers are unlikely to provide any real lift post the budget and so any relief gains in GBP should prove to be limited.”

“Any stumble in Brexit negotiations might reinstate downside pressures on GBP.”