09:05 AM EST, 11/26/2025 (MT Newswires) -- After an unprecedented leak from the OBR, Wednesday's United Kingdom Budget delivered largely as expected, said Sanjay Raja, Deutsche Bank's chief U.K. economist.

Wednesday's Fall Budget marked the third-largest tax-raising Budget since 2010. Put simply, while this year's Budget paled in comparison to the finance minister's spending announcements from 2024, tax-raising measures were indeed "historic," noted Raja.

Nearly 30 billion pounds in taxes were announced, with the extension of the fiscal drag and tapering of pensions and employee salary sacrifice schemes making up the bulk of the tax-raising measures. Increases in property tax, gambling tax and a tax on electric vehicles were also announced.

However, tax hikes were offset by spending rises elsewhere, which amounted to 12 billion pounds. In total, however, Wednesday's announced fiscal consolidation fell short of Deutsche Bank's expectations of 35 billion pounds.

Despite downgrades on productivity, the finance minister was left with larger headroom than anyone expected going into this forecast, offset by stronger earnings growth and equity prices. Put simply, the OBR projections were far better than the bank expected, with the impact of the productivity downgrade on the borrowing outlook far less than anticipated.

As such, a smaller hit to the fiscal headroom required a smaller amount of fiscal consolidation, pointed out Raja.

The temporal distribution of fiscal consolidation is heavily backloaded. As Deutsche Bank anticipated, many of the tax rises announced on Wednesday were baked into the latter half of the OBR's forecast horizon. In fact, only 47% of tax-raising measures come through before 2029/30.

Largely as expected, borrowing is expected to remain on a downward trajectory, added Raja. The U.K.'s budget deficit is expected to drop from 4.5% of gross domestic product to 3.5% next fiscal year. It's expected to drop to just under 2% of GDP by the end of the decade.

In what was a "big" surprise, the finance minister more than doubled her fiscal headroom from around 10 billion pounds to just under 22 billion pounds, added Deutsche Bank's economist. On the finance minister's secondary debt/investment rule, the fiscal buffer rose from just over 15 billion pounds to 24.4 billion pounds.