LIVE MARKETS-Deutsche's five points for Britain's upcoming budget

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DEUTSCHE'S FIVE POINTS FOR BRITAIN'S UPCOMING BUDGET

British finance minister Rachel Reeves will announce her budget on November 26. Investors will be watching closely, given their worries about the fiscal situation in Britain and in many countries around the world.

Deutsche Bank have set out five "pillars" they think would help appease investors, trim Britain's term premium, and so reduce debt servicing costs.

Of course, there are plenty of demands for spending too, but Deutsche's points are:

- keeping increases in borrowing to a minimum. Reeves has a set of fiscal rules she has stuck to, but her budget last year and spring statement saw borrowing requirements rise.

"Lower supply would mean lower demand, and lower demand could ease some of the fiscal risks embedded in gilt term-premia," they say.

- Using spending cuts, as well as tax rises, for fiscal consolidation. On their sums, "the government has pushed through nearly 9 times more taxation than spending cuts." They also note tax measures would help push up already-elevated inflation, as some index-linked items feed directly into the CPI calculation.

- Spread out the fiscal consolidation, i.e. don't backload spending cuts and tax rises.

- Build more fiscal headroom. Reeves' current 10 billion pounds ($13.51 billion) of leeway is small, and means small economic shifts can force her to make changes to her plans.

- Only issue one fiscal forecast a year, down from the current two. That seems like a minor thing. But Deutsche say were the government to do that, it would mean the "gilt market focus on fiscal policy won’t re-surface every six months. And subsequently, the Chancellor won’t need to re-write fiscal policy prior to even implementing Autumn Budget policy measures."

(Alun John)

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