Market comment - UK government to announce substantial fiscal stimulus

Davy Research
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Speculation this morning suggests that Kwasi Kwarteng’s ‘mini-budget’ will unveil a far larger than expected stimulus, with the new government eschewing caution to win the next election. Moves to reverse the 1.25% rise in national insurance and 25% corporation tax rate have been well flagged, but Kwarteng could go further by cutting the 20% income tax rate or VAT. This is despite a deficit already expected to rise to 9% of GDP and risks a collision course with the Bank of England’s efforts to cool inflation.