The political and market reverberations from Chancellor Rachel Reeves's Autumn Budget are deepening, with fresh data revealing a historic exodus from UK equity funds driven by prolonged fiscal uncertainty.
Record Outflows from UK Funds
New figures compiled by the global funds network Calastone show that the period surrounding the Budget has triggered the deepest and most prolonged bout of equity fund outflows on record. In total, investors have pulled more than £10bn from funds over the past six months.
UK-focused funds bore the brunt of this selloff, suffering a net withdrawal of almost £847m. Analysts at Calastone point directly to the protracted uncertainty generated by the Budget and the preceding leak of forecasts by the Office for Budget Responsibility, an event dubbed the 'Leaky War'.
Edward Glyn, head of global markets at Calastone, stated unequivocally: "The political narrative has played havoc with UK savers in recent months. Never have we seen such consistent or large-scale selling before." The data underscores a grim trend, with only one month of inflows for UK-focused funds in the last 55.
Budget Uncertainty and Borrowing Costs
The Budget, which started unexpectedly early on 26 November 2025 after the fiscal watchdog's leak, continues to dominate the financial landscape. The fallout is not confined to equities.
In a separate warning, a leading bond specialist cautioned that the flurry of new spending commitments unveiled by Chancellor Reeves could severely pressure public finances. David Zahn, head of European fixed income at Franklin Templeton, suggested the yield on 30-year UK government gilts could rise to as much as 6 per cent in 2026.
This would mark the highest cost of government borrowing so far this century, driven by the struggle to fund planned increases in areas such as welfare.
A Pattern of Market Volatility
The current selloff contrasts sharply with the market's reaction to Reeves's first Budget in 2024. The sole month of inflows in the past 55 occurred directly after that event, as investors moved to crystallise capital gains ahead of an anticipated raid on capital gains tax, only to recycle the cash back into funds afterwards.
The present sustained withdrawal indicates a more profound and persistent concern over the UK's fiscal direction and its impact on investment returns. The combination of equity flight and warnings over sovereign debt costs paints a picture of a market grappling with significant policy-induced headwinds.
As the Budget's aftermath continues to rumble on, both in Westminster and across trading floors, the data signals a challenging period ahead for UK assets and for the government's cost of borrowing.
