London’s FTSE 100 has started the day on a weaker footing, while the pound struggles against major currencies, after reports suggest Chancellor Rachel Reeves may backtrack on plans to raise income tax in the upcoming autumn Budget.
Chancellor’s Potential Tax U-Turn Sparks Market Volatility
According to financial insiders, the Chancellor is reportedly reconsidering the planned income tax hikes scheduled for 26 November.
While dropping the increase could offer relief to homes, it has raised fresh questions about how the Government intends to cover an implicit financial space of over £35 billion.
The enterprise transferred shockwaves through the fiscal requests.
Gilts Sell-Off Pushes Yields Higher
Government bond prices fell sprucely, pushing 30-year gilt yields up 14 base points to 5.37% and 10-year yields advanced by 12 points to 4.56%. (As a quick companion, bond yields move equally to prices.)
Sterling Weakens Against Dollar and Euro
Sterling also weakened in response, down 0.3% to $1.313 and 0.3% lower against the euro at €1.128. The FTSE 100 opened on the back foot, dropping 101.80 points to 9,705.88, reflecting investor caution amid uncertainty about government borrowing and the UK economy’s outlook.
Investor Concerns Ahead of the Autumn Budget
Market analysts say the shift in tax policy, if confirmed, could add volatility to the UK stock market in the lead-up to the autumn Budget.
“Investors are clearly wary about how the Treasury plans to fill the funding gap without the expected tax revenue,” one strategist commented.
With the FTSE 100 and sterling feeling the pressure, businesses and households alike are watching closely. The autumn Budget is expected to outline not only the Government’s tax plans but also its wider strategy for tackling public spending and supporting economic growth.
