FTSE down and pound weakens after Rachel Reeves’s Budget tax U-turn
The FTSE 100 index has experienced a notable decline, and the British pound is under significant pressure following Labour's Rachel Reeves announcing a reversal on proposed tax increases. This move has contributed to financial instability, leading to investor uncertainty in the market. The stock index has struggled, reflecting broader concerns about economic management under a potential Labour government.
Market analysts have cited fiscal uncertainty as a primary concern for investors. “Despite recent record highs in 2025 driven by its defensive, value-tilted mix and low tech exposure, the FTSE 100 faced renewed pressure amid fiscal uncertainty,” noted an expert at Trading Economics. This situation highlights the fragility of investor confidence in the face of shifting tax policies.
The political landscape has also shifted dramatically, with Labour's new deputy leader, Lucy Powell, emphasizing the need to restore "trust in politics." This call reflects a growing concern among the electorate about the reliability of fiscal commitments made by party leaders, especially in light of recent policy reversals. Such sentiments could further impact market perceptions and economic outlooks as the nation approaches critical financial decisions.