WEAKER commodity stocks pulled Britain’s top share index lower yesterday, while retailers got a lift from the first emergency Budget from Britain’s new coalition government after an expected valued added tax rise was delayed.
At the close, the FTSE was down 52.1 points, or 1.0 per cent, at 5,246.98, having hit its highest closing level in a month on Monday.
British finance minister George Osborne unveiled big spending cuts and tax rises in the tightest budget in a generation, but many of the changes were well-flagged or less harsh than feared.
Retailers gained the most as a delay in a widely forecast hike in value added tax to 20 per cent from 17.5 per cent until 4 January, 2011, lifted expectations for bumper sales in the run-up to the change.
Home Retail Group, Next and Marks & Spencer all rose 1.3 to 1.6 per cent.
“Increasing Vat ... from 4th January 2011, will boost short-term spending on consumer goods in the months ahead, so retailers will be very busy until the end of the year,” said Julian Tolley, head of research at HB Markets.
Supermarket chains WM Morrison, Tesco and Sainsbury added 0.4 to 2.6 per cent on relief that Vat would not be extended to food, as some had feared.
Banks were weak overall, but ended off lows after George Osboure said an expected levy on the sector, from January 2011, would generate £2 bn a year rather than the £3bn expected by some analysts.
Banks all sank yesterday with Barclays, HSBC, and Standard Chartered lost 0.1 to 2.0 per cent.