A budget with few surprises

The UK budget delivered by Chancellor Rishi Sunak on 27 October did not provide many real surprises to what was already leaked in the days leading up to it.

27 October 2021

A commitment to building more affordable homes was already in the price of most housebuilder stocks in the UK and construction stocks are barely reacting to the (old) news of increased infrastructure spending. While it might appear strange that Sunak has pushed the green agenda so strongly ahead of the COP26 summit next week and then cut air passenger duty for UK domestic flights while imposing an increase in duty for long haul flights, it is welcome news to the regional air operators.

It was hoped that the banking surcharge was going to be cut but Sunak has retained the 3% levy, so banking stocks appear to be the biggest losers from the budget. The biggest winners are pub stocks with the planned changes in alcohol duty (to a more simplified rate based on alcohol strength). Any planned fuel duty increases have been cancelled as doing so now with energy prices where they are would be seen as politically unviable.

While the UK is now enjoying its fastest growth rate since 1973 at an Office for Budget Responsibility (OBR) forecasted 6.5% clip as it bounces back from the near 10% contraction last year, UK equities still remain a pretty unloved regional play for global investors. The scarring of Brexit is still a haunting concern for many, and sterling still firmly reflects that.

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Charles Hepworth

Investment Director

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