London midday: Stocks tumble amid Budget U-turn, US rate cut doubts
By Michele Maatouk
Date: Friday 14 Nov 2025
(Sharecast News) - London stocks had tumbled by midday on Friday, with sterling weaker amid reports that Chancellor Reeves will ditch plans to raise income tax at the upcoming Budget, while fading hopes of a US December rate cut and worries about an AI bubble also dented the mood.
The FTSE 100 was 1.8% lower at 9,627.95 , while the pound was down 0.3% against the dollar at 1.3149 .
The chancellor had been widely expected to raise the rate for both higher and basic income tax payers at this month's Budget, despite manifesto pledges to the contrary. But according to the Financial Times, which first broke the apparent about-turn, the chancellor has "ripped up" proposals to raise both basic and higher income tax rates.
Citing unnamed officials briefed on the move, the newspaper said Number 11 was concerned any hike would anger voters and antagonise Labour MPs. However, subsequent reports said the decision had been taken because the government had received a better-than-expected fiscal forecast from the Office for Budget Responsibility.
Citing unnamed people familiar with the matter, both the FT and Bloomberg said an expected black hole of up to £35bn was now closer to £20bn. The update calmed bond markets and helped the 10-year bond yield move back down to 4.50%.
Dan Coatsworth, head of markets at AJ Bell, said: "Wall Street gloom has spread across European and Asian markets like a contagious disease.
"Markets are down across the board as investors fret about cracks in the narrative that's driven the mother of all tech rallies over the past few years. Investors are worried about rich equity valuations and how billions of dollars are being spent on AI just at a time when the jobs market is looking fragile.
"News that Michael Burry, the inspiration behind The Big Short film, is closing his hedge fund also troubled the market, leaving more questions than answers.
"Despite the doom and gloom, the scale of the market pullback wasn't severe enough to suggest widespread panic. A 1% decline in the FTSE 100 is not out of the ordinary for a one-day movement when markets are feeling grumpy.
"Investors in the UK have their own issues to process, let alone whether there is a potential AI bubble waiting to burst. Speculation that Chancellor Rachel Reeves has ripped up part of her Budget plan only days before the big event has spooked the bond market.
"Gilt yields moved higher on talk that the chancellor won't raise income tax rates, leaving bond investors wondering which alternative path she might take to repair UK public finances. Bond markets should, in theory, want the government to take bold decisions rather than tinkering at the edges. For a while it looked as if this might happen, but the latest reports about a policy rethink would suggest otherwise."
A raft of disappointing Chinese data also did nothing to lift the mood.
In equity markets, Land Securities was the worst performer on the FTSE 100 as it lifted its full-year earnings guidance but reported drop in half-year pretax profit to £98m from £243m.
Third Bridge analyst Max Harper said this was short of the £274.2m expected and mainly reflects capital recycling of low-return assets and losses on disposals.
Banks NatWest, Lloyds and Barclays were in the red, along with housebuilders and Persimmon, Berkeley and Barratt Redrow.
Coatsworth explained: "Higher gilt yields can drive up fixed-term mortgage costs because they are used as a benchmark by lenders when pricing long-term products. The situation is bad news for mortgage lenders as pricier home loans could make it more challenging for certain people to get on the housing ladder."
Aerospace company Melrose Industries reversed earlier gains to trade lower as it held annual guidance after "significantly higher" adjusted operating profit in the four months to 31 October on the back of a 14% rise in revenues, driven by engine aftermarket services.
SSE was also weaker after a downgrade to 'sell' at Citi.
On the upside, PPHE Hotel Group surged after its two biggest shareholders confirmed they plan to hold a "small handful" of meetings with financial investors about a range of potential options which include contributing growth capital and a potential "partial monetisation" of their stakes.
In a brief statement in response to press speculation, Eli Papouchado and Boris Ivesha - who collectively own around 44% of the voting rights of PPHE - said they are not in talks with any parties, and are not in receipt of any offer for their collective stake in PPHE.
Market Movers
FTSE 100 (UKX) 9,627.95 -1.83%
FTSE 250 (MCX) 21,619.60 -1.71%
techMARK (TASX) 5,496.67 -1.58%
FTSE 100 - Risers
DCC (CDI) (DCC) 4,990.00p 1.05%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 98.64p 0.00%
Diageo (DGE) 1,818.00p 0.00%
AstraZeneca (AZN) 13,430.00p -0.47%
Hikma Pharmaceuticals (HIK) 1,586.00p -0.56%
Severn Trent (SVT) 2,748.00p -0.58%
Rightmove (RMV) 548.00p -0.58%
Shell (SHEL) 2,839.00p -0.72%
BP (BP.) 456.70p -0.73%
Burberry Group (BRBY) 1,218.00p -0.81%
FTSE 100 - Fallers
Land Securities Group (LAND) 614.50p -5.02%
Metlen Energy & Metals (MTLN) 43.08p -4.70%
St James's Place (STJ) 1,280.50p -4.55%
Entain (ENT) 695.20p -4.43%
NATWEST GROUP (NWG) 598.60p -3.95%
Lloyds Banking Group (LLOY) 90.42p -3.93%
Smurfit Westrock (DI) (SWR) 2,590.00p -3.86%
Barclays (BARC) 410.95p -3.82%
Phoenix Group Holdings (PHNX) 657.00p -3.45%
Flutter Entertainment (DI) (FLTR) 15,010.00p -3.41%
FTSE 250 - Risers
PPHE Hotel Group Ltd (PPH) 1,700.00p 13.33%
IP Group (IPO) 61.40p 2.33%
Computacenter (CCC) 2,868.00p 1.49%
Pantheon Infrastructure (PINT) 106.50p 1.43%
Oakley Capital Investments Limited (DI) (OCI) 559.00p 0.54%
Petershill Partners (PHLL) 313.50p 0.48%
Vietnam Enterprise Investments (DI) (VEIL) 755.00p 0.40%
Watches of Switzerland Group (WOSG) 440.80p 0.36%
Twentyfour Income Fund Limited Ord Red (TFIF) 112.40p 0.36%
Telecom Plus (TEP) 1,696.00p 0.36%
FTSE 250 - Fallers
Ceres Power Holdings (CWR) 331.40p -10.67%
QinetiQ Group (QQ.) 442.40p -5.15%
Bridgepoint Group (Reg S) (BPT) 278.20p -4.99%
RHI Magnesita N.V. (DI) (RHIM) 2,390.00p -4.40%
Endeavour Mining (EDV) 3,270.00p -3.88%
Derwent London (DLN) 1,719.00p -3.86%
Great Portland Estates (GPE) 324.00p -3.86%
THG (THG) 44.38p -3.77%
Hammerson (HMSO) 301.00p -3.77%
British Land Company (BLND) 383.60p -3.62%
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