Much as been written about the budget elsewhere, but it was a shame that after fourteen years out of power their first Budget was what was presented – it is hard to see where the growth is coming from in the near-future. From a UK PLC point of view, the rises in the National Living Wage and on National Insurance Contributions will be the toughest pill to swallow. From April 2025, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently. The move is set to raise £25bn a year, making it (according to the BBC) one of the biggest single tax-raising measures in history.  Sainsbury’s CEO has stated that the NI increase will cost the supermarket over £140m a year, whilst BT said that it would have a £100m impact on the telco business. To combat the raise, the company will cut c.2,000 jobs in the next 12 months, reducing headcount by 4% in a bid to save further costs. Greggs was downgraded to a sell by Deutsche Bank as they estimated that the measures would cost the steak bake emporium £45m a year in added costs. 

Further down the market capitalisation, the AIM market was spared the bloodbath that was feared, but qualifying stocks will no longer be eligible for 100% relief from IHT, as the Chancellor decided to halve the relief. This means an effective death duty rate of 20%. The worry in this is that it is hardly encouraging for the (lack of) demand of companies looking to list on AIM. A small pool, could be getting even smaller…

On the back of the budget, the Bank trimmed rates by a further 25bps, to 4.75%, but we are likely to see a slowdown in cuts over the next few quarters. On the back of Donald Trump’s landslide US election victory, USD denominated names (e.g. Ashtead Group) bounced alongside banks and capital goods businesses. Bitcoin is making all-time highs apparently…

Corporately the market has been relatively quiet. Mike Ashley’s Frasers Group made a bid for Somerset based luxury handbag maker Mulberry which was swiftly rebuffed and REA’s bid for property platform Rightmove fell by the wayside after the Murdock backed Aussie company stepped away from the table. 
 

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