Wall Street climbed higher on Wednesday, on the last day of trading before Thanksgiving as traders remained upbeat on an interest-rate cut next month. Meanwhile, the FTSE 100 (^FTSE) and European stocks also rose as the Office for Budget Responsibility (OBR) forecast the UK government will have almost £22bn in fiscal headroom in five years’ time.
The budget watchdog published the details on its website ahead of finance minister Rachel Reeves’ budget statement in an unprecedented move that appeared to be a mistake.
A Reuters poll of economists published on Tuesday pointed to an increase in headroom to just under £17bn.
The value of the pound jumped after the prematurely-published forecasts showed tax revenue rises of £26.1bn by 2029-30, and economic growth of 1.5% over the next five years.
The OBR expects inflation to reach 3.5% for this year, slightly higher than it estimated in March when it predicted 3.2%. It has also lifted next year’s forecast from 2.1% to 2.5%. It has maintained its 2% estimate for 2027 and the following two years.
Read more: Budget: Rachel Reeves raises taxes by £26bn
Andrew Griffith, the shadow business secretary, said: “This budget process has been a fiasco from start to finish and the unprecedented leak of the OBR’s report is just the final embarrassment.”
The OBR apologised for the “technical error” that saw its budget assessment published ahead of time.
It said: “A link to our economic and fiscal outlook document went live on our website too early this morning. It has been removed. We apologise for this technical error and have initiated an investigation into how this happened.
“We will be reporting to our oversight board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again.
“Our economic and fiscal outlook and supporting documents will be released when the chancellor has finished her speech.”
Read more: UK government bonds jump as OBR releases forecasts before budget
Meanwhile, US stocks are gearing up for their fourth straight advance after tech names helped buoy the broader market Monday. Alphabet (GOOG) ended Tuesday at a fresh record high amid signs it is threatening Nvidia’s (NVDA) dominance in AI chips.
Markets are pricing in an over 80% probability of a December quarter-point interest rate cut by the Federal Reserve after delayed September readings on retail sales and wholesale inflation fell short. An update on weekly initial jobless claims is on Wednesday’s docket, expected to show a slight rise.