The bond market is wrong. The chancellor should not make welfare cuts to placate the City

There are less than three weeks to go. In the lengthy wait for Rachel Reeves's autumn budget, the chancellor will today get the first verdict on her tax and spending plans from the Office for Budget Responsibility (OBR).

- Richard Partington

After the interminable weeks of speculation, kite flying and bad headlines, this moment matters. Has the widely anticipated fiscal gap of up to £30bn been filled? At what cost for growth, inflation, and living standards?

Heading into this moment, the chancellor can take some heart. Gilt markets have rallied in recent weeks, bringing down the cost of government borrowing. What the OBR thinks is one thing. But the bond market is the intimidator-in-chief of governments the world over.

The backdrop in global markets has helped. Falling US borrowing costs are a tailwind. Reeves has also succeeded in rolling the pitch for jittery investors in UK government debt by talking up her commitment to fiscal discipline. The negative space framing her otherwise vacuous speech last week was the acknowledgment that taxes will rise and spending could be cut.

Keeping the bond market on side is important. There are plenty of voices arguing the dangers are overplayed. But Reeves is right to say there is "nothing progressive, nothing Labour" about risking a bond market reaction that would drive up borrowing costs. However, there is a fine line to tread. Bending to the bond market view is no risk-free bet.