The Chancellor announced a range of spending cuts and tax rises in the budget as he aims to restore fiscal credibility and fill the £60 billion gap in public finances. His priority is bringing down stubbornly high inflation, which hit a 41-year high of 11.1%, and although most analysts think we are now close to the peak, it will likely remain above 10% well into next year.

The OBR’s independent assessment was bleak, with households seeing the biggest drop in disposable income on record, with the economy already in recession.

UK jobs data this week was mixed, with unemployment edging up to 3.6%, but wages rising by 6%, which, although higher than expected, further highlights the cost-of-living squeeze against surging price inflation.  

The Bank of England is expected to raise rates by a further 0.50% next month, taking rates to 3.50%, with markets forecasting a peak of 4.50% next year.

In the US, despite the good news that inflation is finally dropping, Fed officials continue to insist there is still a long way to go and they remain in tightening mode, with strong economic data again this week. Markets currently forecast US rates to increase by 0.50% in December, and peak towards 5% mid-2023, followed by potential rate cuts at the end of the year.

The European Central Bank also looks set to raise rates by a further 0.50% in December.