UK shares soar after Hunt unveils new budget

Investor sentiment improved after Britain’s new Chancellor, Jeremy Hunt, unveiled an emergency fiscal statement yesterday. The FTSE 100 finished the session 0.9% higher. Shares were also boosted by better-than-expected results from US companies. The blue-chip index was up 1.2% this morning.

Mr. Hunt unveiled the broad outlines of the medium-term budget plan, which will be fully presented on October 31st. He warned about "very tough" decisions with cuts in government spending and tax hikes, and completely reversed Liz Truss' initial plan, moving to austerity. The only surviving measure from the defunct mini-budget is the removal of the cap on bankers’ bonuses.

Among several measures, a corporate tax hike will be implemented. The new Chancellor said it "will raise around £32 billion a year".

Investors are also cheering reports that the Bank of England might delay the Oct. 31 start of its sales of government bonds to help stabilize the bond markets.

Among stocks, Moneysupermarket.com climbed 4.3% after it said it expected annual core profit to be at the higher end of expectations.

 

Things to read today:

Good riddance to ‘Trussonomics’ (Financial Times)

Liz Truss finally says 'sorry' (Daily Telegraph)