Matthew Burrows

After John Healey's first Budget, the cost of government borrowing over 10 years fell by only two basis points, and for a Chancellor that counts as a win. Gilts are how the Treasury funds the gap between what it spends and what it raises in tax. A basis point is a hundredth of a percentage point, so two is small change, and the yield on gilts due in 30 years fell six. Markets saw nothing in the speech to fear, because he left out the sweeping tax rises and spending cuts. The Debt Management Office raised planned gilt sales for 2026 to 27 to £250.6bn, from £246.2bn in its April forecast. The calm comes with a condition. The forecasts from the OBR, the official forecasting watchdog, assume a 3% cut to next year's departmental spending, which Wellington Management's Eoin O'Callaghan called unrealistic, and fiscal headroom, the buffer against missing Healey's rules, is down to £15bn. Berenberg's Andrew Wishart called it a placeholder Budget. The hard choices on defence and welfare were put off, not dealt with, and they are still in the post.

A 10% capital gains tax rate on up to £10m of lifetime gains sounds like a gift to founders. For law firm partners, the catch is that they have to sell to get it. Founder's Relief is due from 6 April 2027, once a consultation has run. It is not yet clear whether limited liability partnerships, the structure used by law firms, accountancy practices and some doctors, will qualify. Corinne Staves, a partner at CM Murray, expects them to be included. The snag, she notes, is that it is a capital gains relief, so founders must first dispose of the business or their interest in it. That cuts against the model that until recently underpinned much of legal services, where partners join without buying in and leave without selling out. She warns it could change how different generations of partners deal with each other, and calls the shift "probably good news for private equity and other external investors". The relief rewards selling up rather than handing on, and private equity will be reading the consultation closely.

John Healey quit Keir Starmer's cabinet in June because the government would not say how it would reach 3% of GDP, the size of the economy, on defence by 2030, and his first Budget as Chancellor still does not say either. Instead there is a defence financing taskforce and more than £5bn over four years for a new defence focus at the British Business Bank and the National Wealth Fund. The idea is that a public stake lowers the risk for private backers, who then put in more than the state does. The British Business Bank usually backs smaller firms, so this is a new direction for it. The detail on public spending waits for the spending review, expected in the spring. Healey has promised to cover both the 3% target for 2030 and 3.5% of GDP by 2035. Kemi Badenoch, the Conservative leader, called on him to resign for failing to deliver what he demanded when he left Starmer's government. Public money is the bait, and it only works if investors bite. The man who quit over a missing plan now owns the missing plan.

Rosebank has not been approved, yet John Healey's first Budget already counts the tax from it. The OBR, the official forecasting watchdog, assumes revenue from new North Sea fields, Rosebank included, plus discoveries still to be made. It leans on estimates from the North Sea Transition Authority that put prospective resources, fields not yet discovered, at roughly 1.2bn barrels of oil and gas, and it has built in the full amount. With new fields, the OBR expects oil and gas production to fall by about 10% annually from 2027 to 2031. With no output from licensed new fields, it warns the fall could reach 14%. Energy secretary Miatta Fahnbulleh approved the Jackdaw gas field, and the Rosebank decision sits with her. A Treasury spokesperson says Rosebank has been in government forecasts since at least 2019, and the department insists the forecast has no bearing on her decision. Both can be true. But a refusal would now show up as tax the Treasury had counted on, so saying no to Rosebank has acquired a price tag.

John Healey left income tax rates alone in his first Budget, and the tax burden is still heading for a record. The Institute of Economic Affairs' Valentin Boboc says "fiscal drag will do all of the work". Fiscal drag is what happens when thresholds stay frozen while wages rise: more of each pay rise gets taxed, and more people cross into higher bands. No promotion needed, and no letter arrives. On the March forecast from the OBR, the official forecasting watchdog, freezing the personal allowance and the higher rate threshold raised an estimated £34bn in this financial year. Boboc also sees an old British habit, "limiting supply whilst subsidising demand". His example is the new First Time Buyer ISA, which tops up deposits while homes stay hard to build, so in his view prices rise. The OBR has also cut next year's growth forecast from 1.6% to 1.0%. The rate stayed put and the bill didn't, with no minister having to stand up and say so.

One of Britain's simplest sources of growth is more adults, and the OBR says it starts to dry up in 2029. The OBR, the official forecasting watchdog, projects net migration of 100,000 for 2027, almost half what it forecast earlier this year. After that the adult population is expected to fall from 2029 onwards, which means less output and fewer people paying tax. The other numbers point the same way. The OBR expects average earnings to fall in real terms, so pay rises trail prices, after inflation ran above target. Net additions to the housing stock, meaning new homes after demolitions, are expected to stay under this year's total for at least three years. And the health related benefits bill rises by more than 50%, reaching £70bn by 2031/32. Spending goes up, the base paying for it goes down, and the Treasury is left holding the calculator.

The OBR, the official forecasting watchdog, gives John Healey a 56% chance of meeting his fiscal rules, the limits he has set himself on the public finances, which is barely better than a coin toss. That comes before the £11bn he must find after 2029. The watchdog says the money is needed to stop day to day spending falling 2.6% between 2029 and 2032, after allowing for inflation. Its sums also lean on oil and gas prices returning to their levels from before the Iran war by 2028. Growth next year is cut from 1.6% to 1%, and unemployment is forecast to reach 5.1% in 2027. Deutsche Bank thinks the real gap is bigger, at up to £40bn once defence and social care promises after 2030 are counted. Healey has pushed the hard choices past 2029. Getting lucky is not a plan, and 56% is not much luck.

Work started on only 5% of the 88,000 homes London needs each year in 2024 to 25, and the developers' answer is a tax break for buyers. Related Argent, the firm behind King's Cross, and the Institute of Directors are leading the push. They want time limited stamp duty relief on new build homes, arguing faster sales would make stalled schemes viable again. They also want build to rent homes, built to be let out, kept free of rent controls for 25 years, which they say would give investors certainty before they commit money. Related Argent's Tom Goodall says: "It costs more to build a home in Bristol than in Paris, Los Angeles or Sydney." He blames delays, complexity and red tape, since the bricks, steel and concrete are much the same as abroad. Taylor Wimpey and Berkeley have both warned that building in the capital is becoming steadily less viable. The 5% works out at about 4,400 homes, and at that pace London would need 20 years to deliver one year's requirement. That is a queue, not a pipeline.

London Stadium can hold 85,000 for a pop concert but only 60,000 for boxing. The people running it would like that gap closed. The operator, LS185, plans to reclassify boxing as a unique event, so fights get the same limit as concerts. That is room for 25,000 more paying fans on a fight night, and a shot at the mega fights that usually go to Wembley. Fury v Whyte at Wembley in 2022 drew 94,000 people and brought in over £11m. Joshua v Fury in Cardiff in December is expected to earn more than £20m. The push makes sense once you see the lease. The stadium had cost the public £701m. West Ham paid a one off £15m plus £2.5m a year in rent, and the rent was cut when the club went down. The taxpayer now covers £19m a year. Boxing fans may fill 25,000 more seats, but a £701m stadium let on £2.5m a year needs more than a good undercard.

Britain's biggest employers have cut or announced at least 137,000 jobs since Labour took office in July 2024, and entry level hiring has taken the biggest hit. The tally draws on more than 250 reports of layoffs, redundancy rounds and administrations, and it combines announced plans with roles already gone. Shops, pubs and restaurants account for around 45,000 of the cuts, the largest share of any sector. About 30% came from financial, legal and professional services. Ben Caswell, senior economist at NIESR, puts the jump in what an entry level worker costs a firm at 10% in a single year. Almost 1m people aged 16 to 24 are now not in work, education or training. Vacancies slipped under 700,000 in September, a level last seen five years ago. Andrew Griffith, the shadow chancellor, argues there is a direct connection between the jobs tax, meaning the employer national insurance firms pay on staff, and firms laying off staff. Barclays says automation could remove up to 5,000 roles, so not every cut is about payroll. A 10% jump in costs is a hefty premium for a firm weighing up a junior hire.