Budget 2018: Markets
City supports positive measures to help business
Investors took the statement in their stride
The City welcomed the Budget, saying it had little in it to scare investors and some positive news for investors in its generally business-friendly content.
Paul Mumford, senior asset manager at Cavendish Asset Management, said: “I think it is a fairly responsible Budget. There was not anything in it that was not particularly leaked beforehand.
“I and the stock market will be glad Hammond did not muck around with pensions or inheritance tax as you need to encourage smaller companies and smaller savers and this Budget has done that.”
He also said “a big positive” for the City was the help the Chancellor had also given to the high street, including some relief on business rates and the tax crackdown promised on the rival tech giants.
Mumford said an obvious caveat for a “largely relieved” stock market was that much depended on whether there was a successful negotiated Brexit deal and that without that “we will be looking at another Budget next spring”.
Tim Hames, director general of the British Private Equity & Venture Capital Association (BVCA), said the Chancellor had sent out positive signals to business and markets.
He cited the “continued focus on supporting technology start-ups and scale-ups” and support for retailers.
Hames added: “Of particular interest to the BVCA is the further (£200m) boost he has offered to the British Business Bank.”
He said BVCA would continue to work closely with HM Treasury and the Department of Business “to ensure that there is a necessary flexibility of operating mandate” for the British Business Bank as well as the additional money.
Richard Hunter at Interactive Investor commented: “The City was having a strong day anyway even before Hammond stood up.
“However, particularly on the new digital tax, if there is to be a reaction it will come on Tuesday rather than today. Analysts will wait to see if the hit on the likes of Amazon may lead to positive share price moves for bricks and mortar retailers.
“They will also be looking at G4S (the big outsourcing business) to see whether the negative announcement for the private finance initiative has a knock-on effect on the shares.”
Hunter said a US retaliation on the tech tax crackdown in the Budget could not be ruled out, particularly against British pharma giants.
“Pharma giants do a lot of business in the US so they would be most in the firing line potentially, the US is very much their backyard,” Hunter added.
The FTSE 100 closed up 86.76 points (1.25%) at 7,026.32.
Currency markets were relatively muted, both before and after Mr Hammond spoke. Sterling closed slightly off at $1.280, while largely flat against the euro at €1.124.