UKCW 2018

NEC BIRMINGHAM   09-11 OCTOBER 2018

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In his budget presentation to U.K. lawmakers, Chancellor of the Exchequer George Osborne announced tax cuts and a levy on sugary drinks, while also lowering growth forecasts. The benchmark FTSE 100 Index for stocks rose and the pound fell. Below are the winners and losers of the day.

WINNERS:

1) Energy Companies

Companies in the FTSE 350 Index that provide services and equipment to the oil and gas industries rose as much as 4 percent, with John Wood Group Plc leading the advances. The U.K. cut taxes on the North Sea oil and gas industry as Osborne seeks to ease the strain on producers squeezed by plunging oil prices. A caveat: oil is having a good day, with Brent up 3.5 percent. Cairn Energy Plc climbed as much as 6.8 percent.

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2) Housing & Construction

Builders including Galliford Try Plc gained after Osborne pledged funds for road construction projects throughout the country. The FTSE 350 Household Goods & Home Construction Index is near a record high.

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3) Insurers & Financials

Insurers climbed, sending an index tracking them up more than 20 percent from its low last month. The government presented plans to raise the tax-free limit on individual savings accounts to 20,000 pounds ($28,000) from 15,000 pounds a year, while unveiling government efforts to top up savings for those under 40. Shares of investment and insurance firms Hargreaves Lansdown Plc, St James’s Place Plc and Standard Life Plc all rallied on the news.

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Plans to increase the standard rate for Insurance Premium Tax to 10 percent from 9.5 percent, and a boost in flood defense spending, came as a relief to car insurers. While the increase will be likely passed onto consumers, it’s less than the 12.5 percent previously mentioned in news reports.

4) Travel & Leisure

Shares of William Hill Plc, Ladbrokes Plc and Paddy Power Betfair Plc rose after Osborne said he would look at reforming how remote gaming operators are taxed for discounted or free bets. That stopped short of analysts’ biggest concerns regarding possible further increases in taxes on gaming machines and online earnings.

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5) Beer & Spirits

Mitchells & Butlers Plc, Enterprise Inns Plc and JD Wetherspoon Plc advanced after Osborne froze the duty on beer to “to support responsible drinkers and our nation’s pubs,” he said. That follows three consecutive annual cuts of 1 penny a pint. The duty on spirits and most ciders was also unchanged.

6) Gilts

The U.K. debt office altered the way it will conduct gilt sales in the next fiscal year as it seeks flexibility for market makers in the face of increasingly challenging markets. Changes include smaller auction sizes and greater flexibility to sell debt via banks.

7) Small Businesses

Osborne highlighted his backing for small businesses, saying they will benefit from increased thresholds for business rates. Osborne said that will relieve 600,000 small enterprises from paying any rates at all while another 250,000 will see their rates cut. A lower corporation tax of 17 percent by 2020 will also help, he said.

Airbnb hosts are also winners. The first 1,000 pounds of income from any letting will be tax free, along with the first 1,000 pounds from any other services sold online.

8) Motorists

The Chancellor froze fuel duty for the sixth year, a move he said would save the average driver 75 pounds a year.

LOSERS:

1) The pound

Britain’s currency, which has fallen among all of its major peers this year, dropped even further after a cut in 2016 growth forecasts to 2 percent from 2.4 percent. The Office for Budget Responsibility now predicts an expansion of 2.2 percent in 2017 and 2.1 percent in 2018, down from earlier projections. The pound trades near its lowest level since 2009 against the dollar and 2014 versus the euro.

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2) Sugar and Soft-Drink Makers

Associated British Foods Plc, Tate & Lyle Plc, Britvic Plc and A.G. Barr Plc took a hit on Osborne’s attack on sweets. Osborne said the levy on the soft-drinks industry will be introduced in two years, in two bands depending on sugar content levels. The tax is expected to raise 520 million pounds in its first year, part of which will go to schools to promote healthier lifestyles.

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3) Real Estate

Some real estate companies will be hit as Osborne cut debt interest tax relief and changed stamp duty rates for business property.

Source: Bloomberg

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