Markets responded positively to Budget, says Peel Hunt chief
The boss of one of London’s best-known investment banks has shrugged off concerns over the Budget, suggesting that the tax-raising plans pleased financial markets.
Peel Hunt CEO Steven Fine said markets viewed the state of the UK’s finances as “quite stable” following the Budget, pointing to a rise in the government’s fiscal headroom which helped remove some uncertainty among businesses.
“Forget how it was delivered, forget the kite flying, forget the OBR leak,” Fine told CityAM.
“For me the outcome of the Budget was that it was taken well by the market…we saw gilt yields come down towards their 12-month lows, the stock market near an all-time high and the currency market’s slightly stronger.
“The market thinks this is quite stable.”
Fine added that Budget measures to revive London’s stock market, such as a stamp duty holiday for newly listed firms and a cutting of the cash ISA to encourage more investment into stocks was “a start” but “nowhere near enough”.
Fine’s remarks come as Chancellor Rachel Reeves suffered a spate of attacks from MPs over her handling of the Budget after the UK’s fiscal watchdog revealed the public finances were in a better state than she had indicated.
In a speech at the beginning of November Reeves implied that she would have to raise taxes in order to plug a black hole in public spending. Last week she raised taxes by £26bn at the Budget.
But the Office for Budget Responsibility (OBR) later revealed that they had written to her several weeks before the speech with fiscal estimates suggesting the Treasury had a spending surplus of around £4bn, in signs there was no need to raise taxes by nearly as much as Reeves chose to.
Reeves has come under fire for her behaviour, with some suggesting she deceived the public over the health of the public finances. On Sunday she insisted she had to raise taxes due to the OBR’s productivity downgrade.
Capital markets revival
Fine’s remarks come as shares in Peel Hunt rose as much as 2.5 per cent to 108p after the broker and investment bank saw a return in profitability.
The London-listed firm posted pre-tax profit of £11.5m for the six months to the end of September, compared with just £1.2m the previous year. Revenue rose 38 per cent to £74.4m.
Fine said he was enthused by signs of the beginnings of a bounceback for London’s equity markets.
“We’ve definitely seen some signs of a pickup in activity. I think it’s nascent,” he told CityAM.
“Whenever there’s been a decent-sized secondary offering it’s flown out the door. I’ve got an average number of minutes until “books closed” messages are released on a secondary deal of 24 minutes, which is pretty quick.
“And we saw the odd sign of IPOs coming back.”