UK stock prices fall amid concerns about state finances following costly U-turns
British stocks dropped on Wednesday as part of a larger selloff of UK assets amid growing concerns about public finances. This was after Finance Minister Rachel Reeves, who appeared in tears before parliament, made a series costly U-turns regarding welfare reforms.
The blue-chip FTSE 100 lost 0.1%, while the domestically-focussed midcap index declined 1.3%, widely underperforming European peers.
Reeves's distressed appearance at Prime Minister's Question in the House of Commons a day after a bill to reform welfare was only approved after measures that could have resulted in fiscal savings were excluded, raised concerns.
Press secretary for Keir-Starmer, Keir's son, tried to dispel rumours about Reeves' replacement by saying that "the chancellor will not be replaced. She has the full support of Prime Minister Keir".
When asked about Reeves' distress, a Treasury spokeswoman said that it was "personal matters" which had caused the problem.
The pound has dropped more than 1% and government bond prices have fallen the most since 2022.
Kathleen Brooks is the research director of XTB. She said, "This is a signal of fiscal stress that Britain has experienced before."
The FTSE 100 has been less affected by domestic policies, but the FTSE 250 has declined. The government must be cautious about its next moves, as all of the UK's main asset classes are under pressure today.
The index for household goods and home construction fell 5.9%. Bellway dropped 8% while Taylor Wimpley fell 4%
Metal prices are driving gains in industrial metals and mining companies. Ferrexpo gained 3.6%, while Antofagasta added a further 4.2%. Glencore gained 5.1%. This was also helped by a $1 billion share repurchase program that began.
The oil and gas sector gained 2% with BP and Shell gaining 3.2% and 1.7% respectively.
Spectris, a stock that is traded individually, gained 4.3% when it accepted KKR's offer of 4.7 billion pounds (about $6.46 billion), which included debt.
Bytes Technology fell 31.5% and sank to the bottom of midcap index, after it warned of lower operating profits for the first half 2026.
The British fast food chain Greggs dropped 15.1% after it said its annual operating profits could drop as the heatwave in Britain discouraged consumers from eating out.
SSP Group, a restaurant chain operator, topped the midcap index after filing an Indian IPO for airport lounge operator Travel Food Services. Reporting by Twesha Dikhshit and Ankita Yaddav, Editing by Sahal Muhammad and Gareth Jones
(source: Reuters)
