BUDGET 2025: How will markets react?

Page Content

The stock market

The FTSE 100, which is an index made up of the biggest companies listed on the London Stock Exchange, likely won’t see anything dramatic happen today, because these are mostly global companies – so are less affected by UK-specific policy decisions.

We might, however, see something of a ‘sell-off’ on the FTSE 250, where share prices fall because lots of people try to sell their assets at the same time.

If a mansion tax transpires in the Budget, stocks in housebuilders could fall, particularly ones who primarily gain profit from building in the South-East and London, which will have the highest proportion of homes over the suspected £2m threshold.

If the chancellor goes ahead with limiting cash ISA deposits to £12,000 per year to encourage stock market investing, it’s likely that banks will suffer something of a share price dip – as will probably happen if there’s a windfall tax on banking profits (although this is looking unlikely).

The bond market

You may have heard about bond markets a lot this year and be worried about whether they will have a bad day – particularly after the disastrous ‘mini-Budget’ of a few years ago.

However, it’s important to remember that a “bad” Budget for the public isn’t necessary a “bad” Budget for the markets.

What the bond market wants is not necessarily what the voters or party members want. Gilt (government bond) holders want to ensure that they can be paid, which means they’re happy if they think tax receipts will stay strong enough for the government to pay all their bills.