UK budget: Markets on watch for new finance minister's plans

Key Points:

• UK Finance Minister John Healey is set to deliver his first budget amid rising global borrowing costs and high energy prices driven by the Iran war, with markets keenly watching for fiscal discipline after past turmoil caused by unfunded tax cuts.
• The government faces increased interest payments due to a global bond selloff, reducing its fiscal buffer significantly; investors expect clarity on borrowing plans and fiscal rules adherence without major tax hikes.
• The British pound remains relatively stable, supported by positive economic data and market calm, though some analysts warn of potential complacency ahead of the budget announcement.
• Speculation surrounds possible targeted tax increases on banks, particularly an increase in the 3% surcharge on bank profits, which some investors believe is already priced into market expectations.
• Other sectors like gambling and pubs are monitoring potential tax changes, with pub chains possibly spared due to political support, while the housebuilding sector, initially buoyed by budget hopes, has seen gains eroded by rising bond yields and mortgage rates.