Rachel Reeves has suffered yet another humiliating blow as the FTSE 100 flatlines just months into her tenure as Chancellor and days into 2025.
On Friday, the UK’s best-known stock market experienced its sharpest drop in over two weeks, not exactly bringing a promising start to the year.
Despite falling by 0.4%, the blue-chip FTSE 100 still grew by 1.4% this week for the second week in a row – the best result in six weeks. This is made up of well-established, financially-stable companies that are leaders in their sector.
The mid-cap FTSE 250 also fell by 0.2%, but still experienced a gain of 0.7% over the week – its best in four weeks. This is made up of larger companies worth billions.
These drops were mainly caused by spirits maker Diageo, which fell 3.9% after the US Surgeon General warned of the cancer risks that come with drinking alcohol.
It was the worst performer on the FTSE 100 and dragged down the entire beverages sector by 3.4%.
Most major sectors ended up in the red except heavyweight energy shares, which increased by 1.5% due to steady oil prices, which reached a two-month high on Thursday.
This comes as the British Retail Consortium revealed the number of people visiting shops in 2024 fell by 2.2%, marking the biggest drop since 2021 during the Covid pandemic.
The Bank of England has also warned of weak consumer lending and lenders approving fewer mortgages than expected.
This new data follows a trend of deterioration since Reeves’ Budget announcing big tax increases on businesses.
While giving her Budget speech in October, the FTSE 100 slumped to a dismal new low. At 1:30pm it was down by 0.66% compared with the start of trading, having dipped sharply by 40.14 points first thing.
The Chancellor announced a hike in taxes by £40 billion as she promised to « fix the foundations » of the economy and repair the public finances. In the first Labour Budget since 2010, Reeves promised to « invest, invest, invest ».
She said: « Together, the black hole in our public finances this year, which recurs every year, the compensation payments which they did not fund and their failure to assess the scale of the challenges facing our public services means this Budget raises taxes by £40 billion. »
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