The FTSE 100 has hit a record high. The UK’s blue-chip share index has jumped at the start of trading to hit 8068 points, up 43 points or 0.55%That comfortably clears the previous all-time peak of 8,047 points set in February 2023. This extends yesterday’s rally, when shares were lifted by rising hopes that the Bank of England will cut interest rates twice this year. Markets are also more buoyant as fears about an escalating conflict in the Middle East eased. Jim Reid of Deutsche Bank says: "Sentiment was bolstered by the lack of any further escalation in the Middle East. "Indeed, yesterday saw Iran’s foreign ministry spokesman say that Israel had received the 'necessary response at this stage'. The apparent easing in tensions helped oil prices fall back." Meanwhile, Jeremy Hunt’s hopes of being given more scope for large tax cuts later this year have been dealt a blow by the latest borrowing figures. Britain borrowed more than £120bn last year to balance the books; over £6bn more than the independent Office for Budget Responsibility had forecast, but £7.6bn less than the previous year. And that looks to be a blow to Hunt’s ambitions to cut taxes in an autumn fiscal event, as well as pushing up the national debt to the highest since the 1960s. Ruth Gregory, deputy chief UK economist at Capital Economics, says the chancellor appears to have limited "headroom" to cut taxes and still meet his fiscal mandate (to have debt falling as a share of GDP in five years’ time). She explains why Hunt may have limited scope for tax cuts: "March’s figures show that public borrowing in 2023/24 came in £6.6bn higher than the OBR predicted only a month ago, casting further doubt on the ability of the government to unveil big tax cuts at another pre-election fiscal event later this year." Gregory adds: "Just based on the larger-than-expected 2023/24 budget deficit and the recent shift up in market interest rates, he may have even less fiscal ‘headroom’ (perhaps about £5bn) for tax cuts than the £8.9bn left over in March." The Office for National Statistics has also reported tha in March alone, the UK borrowed £11.9bn to cover the gap between government income and spending – higher than the £10.2bn which economists had expected. ONS deputy director for public sector finances Jessica Barnaby says: “Spending was up about £58bn, with increased spending on public services and benefits outstripping large reductions in interest payable and energy support scheme costs. But with public sector income up £66 billion, overall, the deficit still fell. “At the end of the financial year, debt remained close to the annual value of the output of the economy, at levels last seen in the early 1960s.”
The agenda • 7am BST: UK public finances for March and 2023-24 8am BST: Kantar’s index of grocery inflation for March 9am BST: Eurozone flash services and manufacturing PMI report 9.30am BST: UK flash services and manufacturing PMI report 12.15pm: Bank of England chief economist Huw Pill gives a speech at the University of Chicago 2.45pm BST: US flash services and manufacturing PMI report 3pm BST: US new home sales for March We’ll be tracking all the main events throughout the day ...
… there is a good reason why not to support the Guardian
Not everyone can afford to pay for news right now. That is why we keep our journalism open for everyone to read. If this is you, please continue to read for free. But if you are able to, then there are three good reasons to support us today.
1
Our quality, investigative journalism is a powerful force for scrutiny at a time when the rich and powerful are getting away with more and more
2
We are independent and have no billionaire owner telling us what to report, so your money directly powers our reporting
3
It doesn’t cost much, and takes less time than it took to read this message
Help power the Guardian’s journalism in this crucial year of news, whether with a small sum or a larger one. If you can, please support us on a monthly basis . It takes less than a minute to set up, and you can rest assured that you're making a big impact every single month in support of open, independent journalism. Thank you.
You are receiving this email because you are a subscriber to Business Today. Guardian News & Media Limited - a member of Guardian Media Group PLC. Registered Office: Kings Place, 90 York Way, London, N1 9GU. Registered in England No. 908396
