Autumn Budget Looms as Fiscal Doom Loop Fears Grip UK Markets

The UK's economic performance has been disappointing, particularly in contrast to the Eurozone. The latest PMI numbers were not impressive, and sterling continued its slow decline against the euro.

In a welcome change, UK gilts are outperforming other sovereign bonds, likely due to their high yields. However, this is not a cause for celebration, as bond markets are already volatile.

The upcoming Autumn Budget has become a major concern for investors. With yields surging and inflation rising, Chancellor Healey faces a tough task in communicating his plans without triggering fears of a fiscal doom loop.