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FTSE 100 rallies after disappointment at Rishi Sunak's Winter Economic Plan

JIM ARMITAGE
·2-min read
Getty Images
Getty Images

Shares were expected to jump today with the FTSE 100 predicted to open 40 points higher at 6862 after a poor showing yesterday amid some disappointment over Rishi Sunak's scaling back of support for business.

The Chancellor's well-trailed announcements meant calls for an extension to the furlough scheme fall on deaf ears.

Rather than continue paying the wages of those furloughed while the economy recovers, the government will help to top up the wages of those who return to work part time. He also extended the cut in VAT in a bid to help struggling businesses.

The rebound today is unlikely to be enough to take shares back up above where they were at the start of the week due to the heavy tumbles seen on Monday.

European stock markets all fell on Thursday, giving back Wednesday's gains, in a session marred by US Federal Reserve policymaker Eric Rosengren's comments that he was "less optimistic" about the country recovering from the Covid crisis quickly. Crucially, he added that he did not expect any government package to support ailing businesses and jobs soon.

Washington has been at loggerheads over a support package for months, leaving some business leaders yesterday commenting that at least the UK government was offering some fiscal support.

Travel and leisure companies will lose the most from the end of furlough, and their shares fell the sharpest yesterday. Some may stage a minor bounceback today as bargain hunters move in.

Public finance numbers today will be hideous, showing why it is that Sunak has decided he can no longer afford to pay for universal furloughs. CMC Markets says the UK has borrowed £147.2 billion since April, and in August that will probably have increased another £39.5 billion as the cost of Eat Out to Help Out - £522 million - is added to the mix.

"For now, financial markets don't seem to care that much, and why should they when they look on the other side of the Channel where similar large amounts of money are also being pledged to offset the economic shocks in Europe," CMC's markets analyst Michael Hewson said.

Clipper Logistics will be under scrutiny again on talk that it was the subject of takeover interest. The company delivers goods for online retailers and has been a clear winner from the work from home situation.

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