London markets cheer on Chancellor’s budget: FTSE rises 0.8% or 53 to 6,667 points as Rishi Sunak says government is spending £407bn on Covid response
- FTSE 100 index of UK’s leading companies up 0.8% or 53 points at 6,667 today
- However it had been up further in early trading in London at 6,703 this morning
- Hotel operator Whitbread, caterers Compass Group and IAG among top gainers
- Today’s Budget plan includes a five-month extension of furlough jobs scheme
Investors cautiously welcomed Chancellor Rishi Sunak’s Budget statement this afternoon as the London stock market held onto most of its gains from the morning.
The FTSE 100 index of Britain’s leading companies was up 0.8 per cent or 53 points at 6,667 this afternoon, although it had been up further in early trading at 6,703.
Hotel operator Whitbread, catering firm Compass Group and British Airways-owner IAG were among the top gainers on the index, with banks having the biggest boost.
The Budget plan includes a five-month extension of the furlough jobs scheme to steer the economy through what is hoped to be the final months of restrictions.
Mr Sunak said measures to support the economy amounted to £65billion over this year and next, taking the total Government support to £407billion over that period.
He also told MPs this afternoon that the UK’s recovery from the economic damage caused by coronavirus will be ‘swifter and more sustained’ than previously thought.
TODAY: The FTSE 100 index rose to 6,703 this morning before trading at 6,667 this afternoon
PAST MONTH: The FTSE has had a positive few days this week after suffering a fall last week
PAST 18 MONTHS: The FTSE plunged when the pandemic began but has since been recovering
However he warned politicians in the House of Commons that it would take ‘a long time’ to rebuild and pledged to do ‘whatever it takes’ to support people.
The Office for Budget Responsibility expects the economy to return to its pre-Covid level by the middle of next year – six months earlier than they previously thought.
But he also told MPs that despite the £280billion of support already committed to protecting the economy, the ‘profound’ damage done by the virus has been ‘acute’.
Mr Sunak said: ‘Our economy has shrunk by 10 per cent – the largest fall in over 300 years. Our borrowing is the highest it has been outside of wartime.
Chancellor Rishi Sunak delivers a Budget statement to the House of Commons in London today
The London Stock Exchange sign in the City is pictured. Investors reacted to the Budget today
‘It’s going to take this country – and the whole world – a long time to recover from this extraordinary economic situation. But we will recover.’
The Chancellor said the OBR expects the economy will be 3% smaller than it would have been in five years’ time because of the coronavirus crisis.
However it also forecasts that the economy will grow this year by 4 per cent, by 7.3 per cent in 2022, then 1.7 per cent, 1.6 per cent and 1.7 per cent in the next years.
Meanwhile in Germany today, there was positive sentiment as the country’s Dax rose 1 per cent to hit a record high with the government set to relax coronavirus rules.