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FTSE 100 climbs, Spring Budget income tax cut back in question

Published 06/03/2024, 10:04
Updated 06/03/2024, 10:10
© Reuters.  FTSE 100 Live: Index climbs, Spring Budget income tax cut back in question

Proactive Investors -

  • Lead index up 27 points to 7,673.
  • Hunt prepares Spring Budget.
  • Construction sector sees better February.

Spring Budget income tax cut back on the cards

Chancellor Jeremy Hunt could well cut income tax alongside national insurance in Today’s Spring Budget, reports have said.

According to Politico, one cabinet minister said they expect Hunt to unveil a surprise 1p cut to income tax in the statement.

This would be alongside an expected 2p cut to national insurance as the government looks to tempt voters in what is most likely its final budget before the next election.

Hunt had reportedly ruled out an income tax cut earlier in the week over fears it would be too expensive and risk putting the government’s battle against inflation in jeopardy.

Construction sector sees improved demand in February

Britain’s construction sector enjoyed stronger demand in February, aiding the rate of new business growth to its fastest since May 2023.

At 49.7 in February, S&P Global’s UK Construction Purchasing Managers Index (PMI) was up from 48.8 in January.

Housebuilding saw a near-stabilisation of business activity, the financial information firm noted, while residential and commercial construction also saw improving market conditions.

“A stabilisation in house building meant that UK construction output was virtually unchanged in February,” S&P economics director Tim Moore commented.

“This was the best performance for the construction sector since August 2023 and the forward-looking survey indicators provide encouragement that business conditions could improve in the coming months.”

Total new orders expanded for the first time since July last year, while optimism was at its highest since early 2022 in the face of possible interest rate cuts soon.

Employment marked the weak spot however, according to S&P, with staffing numbers dropping for the second consecutive month and at the fastest rate since late 2020.

“A recent soft patch for work on-site, alongside strong wage pressures, had led to cost-cutting measures including the non-replacement of voluntary leavers,” S&P’s report said.

Spring Budget cuts could ‘seriously’ affect public services - analyst

Cuts widely expected to be unveiled in today’s Spring Budget could seriously hamper Britain’s public services, commentators have warned.

Chancellor Jeremy Hunt is anticipated to unveil handouts in the statement, which will likely be the government’s last before the next general election, including cuts to national insurance and a sustained freeze on fuel duty.

However, questions have been raised over where funding will come from to cover the £15 billion cost to the Treasury from the 2p and 5p reductions on each respectively.

Commenting on expected spending cuts elsewhere, Tax Natives’ money expert, Andy Wood, warned of further “understaffing, reduced resources, and longer wait times,” in Britain’s public services.

“These cuts don't just affect numbers on a budget spreadsheet; they affect real people and their ability to access necessary services when they need them most,” he said.

In the longer term, “further cuts may force the government into a corner, leaving them with limited options such as raising taxes or borrowing more to fill the gaps,” he added.

“While reducing spending is one way to balance the budget, weighing the potential consequences carefully is essential.”

Challenger, Active Energy lead junior market risers

Challenger Energy and Active Energy led the risers on London’s junior market on Wednesday morning, as the AIM index as a whole climbed 5 points to 3,556.

Challenger Energy Group PLC (LON:CEG) soared over 50% after unveiling a farm-out deal with Chevron (NYSE:CVX) for the junior explorer’s project offshore Uruguay.

This will see it paid US$12.5 million of cash upfront, alongside other funding for the exploration project, with Chevron taking on a 60% interest.

Active Energy Group PLC (LON:AEGR) gained over 20%, after confirming US$1.65 million had been received from a settlement agreement with Player Design Inc.

And finally, Eco (Atlantic) Oil & Gas Ltd was among other big risers early on, after unveiling its own farm-out agreement with TotalEnergies (LON:TTEF) and Qatar Energy, through which it will receive up to US$32.1 million of value in relation to the Orange basin, offshore South Africa.

The FTSE 100 climbed 18 points to 7,664 in the meantime.

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