'High expectations' Why Reeves is eager to keep bond markets happy

At just after 12.30pm tomorrow, the machine will be listening, the trading algorithms ready, and billions of pounds of buy and sell orders stacked up awaiting Rachel Reeves's budget.

- Richard Partington

For the first time on the London trading floor of Deutsche Bank, a custom-built artificial intelligence tool will transcribe the chancellor's words, spot shifts in tone and spit out alerts when the numbers deviate from expectations.

“As we get it, in real time, we'll be able to decipher it,” says Sanjay Raja, the bank's chief UK economist. The AI tool has been trained on all Reeves's recent public appearances: media interviews, conference speeches, the spring Office for Budget Responsibility (OBR) forecasts and last year's budget. All with the aim of giving the bank an edge in one of the most heavily anticipated budgets in recent history.

“There are some high, high, high expectations going into 26 November, for the budget to deliver on the part of the City,” says Raja.

This is the age of the bond market budget. After an explosion in government borrowing and a sharp rise in debt interest costs, on top of the scars of the Brexit vote and with Liz Truss's mini-budget still fresh, how the market reacts is critically important.

For months, Reeves has been schmoozing the biggest players in the £2.7tn UK government debt market, including hosting the bosses of Goldman Sachs and JP Morgan in Downing Street, in a bid to ensure smooth passage for her multibillion-pound plans.

What the market thinks has been pored over by commentators throughout the budget buildup. The fear is that upsetting the market could trigger a selloffdriving up borrowing costs for the government, mortgage holders and businesses. That could trigger a domino effect that in turn costs Reeves and Keir Starmer their jobs - potentially paving the way for a new Reform UK-led government.

Reeves was given a taste of the bond market's power this month when government borrowing costs spiked after it emerged she had ditched plans for a manifesto-busting increase in income tax.