The prospect of around £27bn of tax hikes in the Budget on 26th November poses a downside risk to our forecast for GDP to grow by 1.2% in 2026 and by 1.5% in 2027. But it adds to our views that CPI inflation will fall further than most expect next year and the Bank of England will cut interest rates from 4.00% now to 3.00% in 2026 rather than to 3.50% as investors anticipate.
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