INSTANT VIEW-Britain's new finance minister unveils first budget

LONDON, Oct 29 (Reuters) - British finance minister John Healey announced a cautious budget plan on Wednesday as he tries to avoid piling more bond market pressure on the new government of Prime Minister Andy Burnham.

Healey said the headroom - the amount of extra spending or tax cuts the government can make under its own fiscal rules - stood at £15 billion ($19.93 billion), in line with expectations from a Reuters poll, but below the £23.6 billion in March.

Britain's 10-year government bond yield was down 2 basis points on the day at 5.323%, while the 30-year yield was down 3 bps at 5.711%, as prices rose.

Sterling was down 0.1% to $1.3298 after earlier hitting a 1-1/2 week low. It fell just 0.1% against the euro at 83.72 pence.

The blue-chip FTSE 100 index .FTSE was up 0.1%, broadly in line with gains in other major European stock markets. The FTSE 250 .FTMC, which generates a greater proportion of its revenue domestically, was up 0.4%.

Bank shares rose after a smaller-than-feared tax hike on their profits. Shares in Lloyds LLOY.L, Barclays BARC.L and NatWest NWG.L were up between 3.3% and 3.6%.

COMMENTS:

KATHLEEN BROOKS, RESEARCH DIRECTOR, XTB, UK

"It was meant to be a steady-as-you-go budget. The bond market is calling it a very boring budget - yields are a couple of basis points lower at the long end and virtually unchanged elsewhere. So nothing that's going to change the fiscal picture for the UK significantly.

"Even though we're borrowing more nominally, it's not having an impact on markets and it's not a worry for investors. The reason why is because the government is capitalising on the better growth forecasts. So that actually means that debt as a percentage of GDP can still fall over the next five years, rather than just increase borrowing and see the borrowing rates and rates go up. The fact that the bond market hasn't moved on the back of this suggests that this budget does not change the fiscal picture for the UK.

"There's not a huge amount of detail which suggests to me that he's wanting to wait for the spending review next year or even for an election in the coming months."

JANE FOLEY, HEAD OF FX STRATEGY, RABOBANK, LONDON:

"Right now, the budget hasn’t meant an awful lot for the pound."

"The silver lining of the (2022 Liz)Truss budget is it has created an environment where politicians don’t want to create any rucus for the market.

"That’s what we’ve had, a very much a nothing-to-see here budget, which hasn’t been a big focus of markets."

KIRSTINE KUNDBY-NIELSEN, SENIOR ANALYST, DANSKE BANK, COPENHAGEN:

"It looks marginally better than expected. They are taking a bit of a hit on the headroom, growth forecasts are revised downward and inflation revised upwards. It looks fairly balanced.

"Markets are sending the pound slightly stronger and gilts are outperforming a little bit. It's a bit of risk premium being priced out of the curve as the lack of something bad is removed."

ANDREW WISHART, SENIOR UK ECONOMIST, BERENBERG, UK:

"The Chancellor's basically pushed back fiscal consolidation by a year to accommodate the cost of paying for inflation uplifts from government debt and fund that cash payment to lower income households, which is sort of £300 for the people in the bottom half of the income distribution.

"The market seems to be very happy with it, because the increase in inflation that's driving up debt servicing costs should be temporary. And also the giveaway to households is time-limited and partly offset by that higher tax on bank profits. So we can be fairly confident that deficit reduction will get back on track in 2027 to 28."

"But to be honest, the big questions really will come in the spending review and how the government will will fund that next year. And that will either require some more serious cuts to non-priority areas, or an increase in tax."

MIKE BELL, HEAD OF MARKET STRATEGY, RBC BLUEBAY ASSET MANAGEMENT, LONDON:

"The energy support is clearly helpful at the margin, but a £100-energy payment against the backdrop where energy bills are forecast to rise by about £666 by April, is really small fry in the grand scheme of things. We're looking at inflation that is going to be at about 4.5% by January.

"Because of the fiscal constraints, Healey probably felt that he's not in a position to deliver more support on energy bills, and ultimately he's been dealt a very difficult hand by the war in Iran. If it wasn't for the war in Iran, you'd have 2% inflation, and he could have put the minimum wage up by 2.5%, and the Bank of England wouldn't have to raise interest rates, and everything would have been okay."