UK’s FTSE 100 fell to a more than two-month low on Friday as concerns about a potential recession raised by bad economic data were not allayed by the new government’s economic plan, which included tax cuts and other business-friendly measures.
Britain’s new finance minister, Kwasi Kwarteng, unveiled a plan to boost economic growth and break the country’s cycle of stagnation, but it came with a hefty price tag.
The locally oriented FTSE 250 index fell 1.1% to nearly two-year lows, while the globally focused FTSE 100 index continued to deteriorate, dropping 1.6% to its lowest level since July 15.
The UK’s homebuilder stocks were one of the few shining lights, rising 1% after Kwarteng announced that stamp duty will be reduced to make it easier for households to afford to buy homes.
Due to concerns about affordability caused by rising rates, it is one of the UK’s worst performing industries this year.
According to Roger Jones, head of equities at London & Capital, “given that share prices are low, I think these support measures are quite good for the housebuilding sector.”
Overall, the headlines and speech haven’t revealed much that will surprise anyone.
The plan also called for raising the company tax rate and eliminating the top income tax rate in the nation. According to Kwarteng, Britain will spend over 60 billion pounds ($67 billion) on gas and energy subsidies for homes and companies over the course of the next six months.
According to a poll, the recession risk for British firms increased this month as they struggled with rising expenses and waning demand.
The S&P Global/CIPS flash Composite Purchasing Managers’ Index (PMI) slumped to 48.4 in September. According to a Reuters survey of economists, the number was 49.0. Any reading under 50 shows a decrease in activity.
Burberry, one of the individual stocks, dropped 4% when the premium brand announced that Chief Financial Officer Julie Brown will be retiring in April.
Following the industrial technology company’s optimistic full-year prediction for 2023, Smiths Group saw a 4.1% increase.
Made.com’s stock fell 21.7% after the online furniture retailer announced job cuts and that it was considering selling off some inventory as it battles a sharp decline in customer spending and supply chain issues.
