Chancellor targets cost of living crisis in budget for a ‘difficult moment’

AI desk brief

UK Chancellor John Healey is set to frame the budget as a response to a “difficult moment,” with measures aimed at easing cost-of-living pressure, including temporary support for poorer households, possible fuel duty relief and energy-market reforms. The article says higher energy prices from Middle East conflict have pushed UK inflation to an in-year high of 3.5% and helped drive gilt yields sharply higher, with the government paying above 5% on a five-year bond, the highest since 2008.

For metals, the key transmission is through inflation and rates: cuts to energy costs could cool inflation and reduce pressure on the Bank of England to keep hiking, although markets are still pricing four hikes to 4.75% over the next 12 months. The setup is mixed overall, with softer inflation supportive for bullion but higher sovereign yields and ongoing bond-market turmoil still a headwind.