The government expects its Autumn Statement to be judged on three tests. First of all, how do the markets react?
The decisions announced today by the Chancellor Jeremy Hunt mean that the government will be issuing £31 billion less in gilts – in other words, in borrowing – than expected after the mini-Budget. The initial market reaction to this has been positive. However, the new fiscal rule – to have debt falling as a percentage of GDP by the end of the five-year forecast period – is still relatively loose. Hunt and Sunak are relying on their credibility and their willingness to make difficult choices to reassure the markets.
Perhaps the biggest challenge for the government though is just how bad the economic situation is.
Second, will the Statement be seen as fair? Even if the mini-Budget had not led to a spike in borrowing costs, it still would have been a hard sell.
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