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Issue 270 | 1st December 2025

UK

• Chancellor Rachel Reeves delivered the highly anticipated autumn budget, with a raft of changes to taxes, pensions, ISAs and welfare, bringing wider fiscal headroom and no immediate inflationary risks.
   
• Market reaction was relatively muted, with the pound climbing and gilt yields falling as the budget was believed to be moderately deflationary. However, the key feeling from investors seemed to be relief that the budget was now over, removing one of the key sticking points for UK assets in recent months.
   
• Ahead of the budget, forecasts from the Office for Budget Responsibility were mistakenly published early, with the report showing tax rises of £26.1 billion by 2029-30, and growth of 1.5% over the coming five years.
   
• Moody’s warned that the budget had ‘high execution risks’, welcoming the government’s plans to bring the country’s finances back in line, but stated that slower growth or higher interest rates risked worsening the debt burden.
   
• The latest quarterly Distributive Trades Survey from the Confederation of British Industry showed a growing share of companies expect their business situation to deteriorate over the coming quarter. Retail confidence fell sharply, with retail sales volumes in the year to November recording a weighted balance of minus 32 per cent, compared with minus 27 per cent in October. Comparative seasonal figures were also disappointing, with retailers judging November to be ‘poor’ (-25%), with expectations that December would also disappoint seasonal norms. 

North America

• Comments from senior Federal Reserve (Fed) official, John Williams, suggested that a softer labour market poses a greater threat to the economy than inflation, with investors taking this as a signal of an upcoming interest rate cut in December. Additional comments from Fed Governor, Christopher Waller, also signalled that a rate cut was possible.
   
• Economic data slowly continued to emerge following the end of the record-long government slowdown. However, the calendar remained thin and was further slowed by one and a half days of market closure due to Thanksgiving celebrations.
   
• A 10-hour outage at major derivatives market, the Chicago Mercantile Exchange, affected everything from equity index contracts to US Treasurys and commodities. However, the outage falling on Friday, when volumes were expected to be low due to the Thanksgiving, marginally reduced the impact.

Europe

• European Union (EU) trade ministers met with US trade representatives in Brussels. EU trade commissioner Maroš Šefčovič stated that the discussions had been ‘constructive’ but concluded that more work is needed to reduce tariffs ‘especially on steel and steel derivatives’.
   
• German business morale fell unexpectedly, with the Ifo institute reporting that its business climate index fell to 88.1 in November, from 88.4 in October. 

Asia

• Officials in China launched a 19-point plan in an attempt to stimulate domestic consumption, with ‘hotspots’ including fitness equipment, pet food and supplies, civilian drones and trendy toys. The plan, which is due to run until 2030, was released by the Ministry of Industry and Information Technology and five other departments, and targeted specific sectors to promote.

Sources: Bloomberg, Reuters, Yahoo Finance, The Guardian, Proactive Investors, BBC, Oxford Economics, FactSet 

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