Preheat oven to 350°F (175°C).

In a large bowl, combine bread cubes and raisins.

In a saucepan, heat milk and butter until butter is melted. Remove from heat and stir in sugar until dissolved.

Mix in eggs, vanilla extract, and nutmeg. Pour over bread mixture, ensuring all pieces are soaked.

Transfer mixture into a greased baking dish. Bake for 45 minutes, or until set and golden brown.

For the vanilla sauce, in a saucepan, melt butter over medium heat. Stir in sugar, milk or cream, and vanilla extract. Cook until the mixture slightly thickens.

Serve the bread pudding warm, drizzled with the vanilla sauce.