In a stunning mishap, the UK's official budget watchdog accidentally released its analysis report prematurely before the Chancellor's speech.
The report revealed that Chancellor Rachel Reeves had significantly expanded the fiscal buffer from £9.9 billion in March to £22 billion (approximately $29 billion). The Office for Budget Responsibility (OBR) had previously projected a £9.9 billion fiscal headroom in March—the amount available for additional spending or tax cuts while adhering to the government's self-imposed budget rules.
Reeves bolstered the fiscal buffer by raising £29.8 billion in taxes, including new levies on gambling and high-value real estate.
The leaked document not only disclosed the largest fiscal leeway in UK spending plans since March 2022 but also showed the figure far exceeding the median estimate of £15 billion. This key metric was made public as part of the OBR's unprecedented "early" budget analysis release.
Following the report, the British pound briefly dropped 30 pips against the US dollar before recovering slightly, though it remained down 0.1% for the day.
The OBR later confirmed the authenticity of the release, acknowledging that the link to its forecast report had gone live on its website "too early." The agency apologized for the error and stated that an investigation had been launched.
As traders attempted to digest the mixed signals in the report, UK government bonds fluctuated between gains and losses. While the fiscal buffer exceeded expectations, growth forecasts for the entire projection period were downgraded to reflect lower productivity.
However, these negative impacts were offset by the positive effects of higher inflation and stronger wage growth on public finances.
Other measures evident in the leaked document included additional taxes on homes valued at £2 million or more and a 2-percentage-point increase in tax rates on property and savings income.
The document also stated that pension contributions exceeding £20,000 would no longer be exempt from National Insurance Contributions (NIC), while the employer NIC threshold would be frozen for three years starting in 2028-29.
Additionally, the government will introduce a mileage-based charge for electric vehicles from 2028. The freeze on fuel duty will be extended until September 2026. Capital allowances for corporate taxes will be reduced, a move expected to raise £1.5 billion.
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