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Stocks in London were lower on Friday morning after media reports that UK Chancellor Rachel Reeves scrapped plans to raise income tax, with gilts rising the most since July amid a sell-off in UK government bonds. The FTSE 100 index opened down 108.13 points, 1.1%, at 9,699.55. The FTSE 250 was down 250.02 points, 1.1%, at 21,745.49, and the AIM All-Share was down 6.69 points, 0.9%, at 748.77. The Cboe UK 100 was down 1.1% at 968.51, the Cboe UK 250 was down 1.3% at 18,833.13, and the Cboe Small Companies was down 1.0% at 17,660.89. Banks and miners led the declines, with housebuilders closely behind. Adding to the pressure, concerns around the UK fiscal outlook intensified after reports suggested the chancellor has abandoned plans to break Labour’s manifesto pledge and raise income tax at this month’s budget. According to the Financial Times, Rachel Reeves has decided to drop the planned tax rise amid fears it would anger voters and Labour backbenchers. The chancellor had been expected to pursue an income tax increase to help close a significant gap in her spending plans, warning earlier this week that the alternative would be ‘deep cuts’ to public investment. The FT reported that Reeves informed the Office for Budget Responsibility on Wednesday of the ‘major measures’ to be included in the November 26 budget. One option reportedly being considered is reducing income tax thresholds rather than raising tax rates, which could still raise billions for the Treasury. Britain’s long-term borrowing costs were sent soaring. Yields on 30-year UK government bonds, also known as gilts, jumped as much as 14 basis points in early trading, and the yield on 10-year gilts also shot up 12 basis points rising the most since July. The yield moves counter to the price of bonds, meaning that prices fall when yields rise. Yields later eased back a little, with 30-year gilt yields standing seven basis points higher at 5.3% and 10-year gilt yields up six basis points at 4.5%. In European equities on Friday, the CAC 40 in Paris was down 0.4%, while Frankfurt’s DAX 40 shed 0.7%. Germany’s federal budget for next year cleared a key hurdle after the Bundestag’s budget committee approved a €524.5 billion spending plan, €4 billion higher than initially proposed. It includes nearly €98 billion in new core budget borrowing, with additional loans from a defence and infrastructure fund set to push total new debt above €180 billion. A final vote is expected between November 25 and 28. Separately, data showed Germany saw applications for regular insolvency proceedings rise 6.5% annually in October, though slower than September’s 10.4% increase. ‘It should be noted that the applications are only included in the statistics after the insolvency court’s initial decision. In many cases, the actual date of the insolvency application is approximately three months prior,’ the statistical office said. In France, consumer inflation slowed more than expected. October CPI rose 0.9% year-on-year, easing from 1.2% in September and undershooting the 1.0% preliminary estimate. On a monthly basis, consumer prices rose 0.1% in October after a decline of 1.0% in September, and in line with preliminary data. On a harmonised level, allowing for EU-wide comparison, France’s annual CPI inflation rate slowed to 0.8% in October from 1.0% in September, which is a sharper deceleration than the rate of 0.9% Insee had reported at the end of October. The pound was quoted at $1.3128 early Friday in London, down from $1.3197 late Thursday. The euro stood at $1.1630, down to $1.1644, while the dollar traded at JP¥154.57 up from JP¥154.31. Land Securities was the biggest faller, down 3.4% on the FTSE 100. Pretax profit for the six months to September 30 dropped to £98 million from £243 million, reflecting losses on disposals despite underlying rental income growth. EPRA earnings rose to £192 million, lifting EPRA EPS by 3.2% to 25.8p, while net rental income increased to £284 million from £269 million. Landsec declared an interim dividend of 19.0p, up from 18.6p, and said occupancy rose to around 98%. It maintained a ‘firmly positive’ outlook and expects annual EPS growth at the top end of its 2%4% range. Like-for-like net rental income in the year to March is now expected to grow by between 4% and 5%, up from initial 3-4% guidance. Melrose Industries was among the few FTSE 100 gainers, up 0.8%, after reporting a ‘strong performance’ in the four months to October 31. Group revenue rose 14% year-on-year, with Engines up 28% and Structures up 5%. Adjusted operating profit was ‘significantly higher,’ and the aerospace group reiterated full-year guidance, noting robust civil and defence demand and welcoming recent tariff agreements. PPHE Hotel Group topped the FTSE 250, up 11%, after shareholders Eli Papouchado and Boris Ivesha, who jointly hold around 44% of voting rights, said they plan to meet financial investors to explore options including providing growth capital or partially monetising their stakes. They stressed no talks are underway and no offer has been received. The announcement, following media reports of a potential take-private move, placed the group in an offer period under the Takeover Code. Among smaller caps, WH Ireland rose 19%, extending Wednesday’s surge after receiving an indicative all-share proposal from Team PLC, offering 0.195 Team shares per WH Ireland share. The board is assessing the approach but emphasised there is no certainty of a firm bid. Team has until December 10 to formalise an offer. In Asia on Friday, the Nikkei 225 in Tokyo fell 1.8%. The Shanghai Composite lost 1.0%, the Hang Seng dropped 1.9% and Sydney’s S&P/ASX 200 closed down 1.4%. In New York on Thursday, Wall Street closed sharply lower. The Dow Jones Industrial Average fell 1.7%, the S&P 500 also dropped 1.7%, and the Nasdaq Composite slid 2.3%. The yield on the US 10-year Treasury was quoted at 4.14%, widening from 4.07%. The yield on the US 30-year Treasury was quoted at 4.74%, widening from 4.67%. Brent oil was quoted at $63.72 a barrel early Friday in London, up from $63.14 late Thursday. Gold was quoted at $4,179.70 an ounce, down from $4,206.40. Still to come on Friday’s economic calendar are eurozone GDP, employment and trade balance data, as well as Canada manufacturing sales. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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