Monday 22 March 2010

Uk Budget Week kick-off

There has been some interesting positioning around the budget this weekend. Firstly, Labour claim that this is it, if they win an election there will not be another budget.

In this sense then the budget may have a greater impact on the market than we had been expecting.

Also Alistair Darling has said he will outline, in what detail who knows, some of the cuts to public expenditure that the Government wishes to make.

Finally, Darling spoke abut 'no pre-election giveaways.' Now what that means I know not, but I presume it means more money for deserving causes of Labour voters and nowt else.

The real downside I can see though is that the Treasury is forecasting growth of 3.5% next year., The only way that will happen is if we have a massive inflationary boom on the back of a collapsed Pound. So either the treasury are not letting on to the disaster they are forseeing or else they are allowing Labour to play dirty election politics by pretending the deficit is just going to go away on its own.

Still, overall an interesting set-up as there will be more in the budget than I had thought previously. Tomorrow I will do a post on my 'trading the budget' positions, which have hte past few years done pretty well; this year is proving a challenge though.


Budgie said...

There has already been a £200 billion election giveaway.

Andrew B said...

Looks like the market is busy making its comment right now.

Anonymous said...

@Andrew B

All the markets are down, doubt the trading algorithms could give a shit about the UK budget.

Steven_L said...

On my sums the market is pricing in about a 1% hike in 10 year gvt borrowing rates by mid June.

Enough to put me off shorting gilt futures.

CityUnslicker said...

SL - Yeah its a hard one, I would only have it as a short-term position. however, if the election gets closer then gilt prices are going to wobble big time along with the pound.

Laban said...

"Firstly, Labour claim that this is it, if they win an election there will not be another budget"

Because they'll invoke emergency powers under the Civil Contingencies Act, conscript labour, fix prices and impose exchange controls ?

Or because they'll be too busy trying to restore civil order ?

Letters From A Tory said...

I think it was more of a case of Darling telling Brown to stay away when he talked about 'no giveaways', seeing as Brown is desperate to claw some more voters towards Labour.