After Rachel Reeves’ Revenge Budget, many of those who had prematurely heralded a turnaround in the fortunes of the UK stock market had second thoughts. They had hoped for some measures, such as a partial lifting of stamp duty, to signal the government’s wish to reverse the UK’s decline. Instead, there were several measures indicating its hostility to the private sector in general and listed firms in particular. The government, it seems, only wants growth of the right sort, financed by taxation, government borrowing, or bullying large pension funds.
Why UK equities suffered from outflows
Past experience of tax increases is that they raise much less than expected, perhaps just half. This is particularly likely when many of the tax increases, such as those on non-domiciles, capital gains and inheritance, are “honesty box” taxes. Meanwhile, rising bond yields are ratcheting up the cost of borrowing. With hopes for…
