The chief executive of a leading London investment bank has dismissed concerns surrounding the recent Budget, arguing that financial markets responded favourably to the government's tax-raising plans.
Market Stability Post-Budget
Steven Fine, the CEO of Peel Hunt, stated that investors now view the UK's fiscal position as "quite stable" following the Chancellor's announcement. He pointed to a key increase in the government's fiscal headroom as a factor that reduced uncertainty for businesses.
In comments to City AM, Fine urged observers to look past the political drama, saying: "Forget how it was delivered, forget the kite flying, forget the OBR leak. For me the outcome of the Budget was that it was taken well by the market."
He highlighted concrete market movements as evidence of this positive reception:
- Government bond (gilt yields) fell towards their lowest levels in twelve months.
- The UK stock market traded close to a record high.
- The pound showed slight strength in currency markets.
Criticism of Chancellor Reeves and Capital Markets Measures
Fine's assessment comes as Chancellor Rachel Reeves faces intense criticism from MPs over her handling of the Budget. The controversy stems from revelations by the Office for Budget Responsibility (OBR).
The fiscal watchdog disclosed it had informed the Treasury weeks before the Budget that it projected a spending surplus of around £4bn. This contrasted with Reeves's earlier warnings of a 'black hole' necessitating significant tax rises. In the Budget, she ultimately announced tax increases totalling £26bn.
While welcoming specific Budget measures aimed at reviving London's equity market—such as a stamp duty holiday for new listings and changes to cash ISAs—Fine described them as merely "a start" and "nowhere near enough" to fully address the challenges.
Peel Hunt Sees Profit Surge Amid Market Pickup
The Peel Hunt CEO's remarks coincide with a strong financial performance from his own firm. Shares in the broker and investment bank rose up to 2.5 per cent after it reported a sharp return to profitability.
For the six months to the end of September, the London-listed company posted a pre-tax profit of £11.5m, a dramatic increase from just £1.2m a year earlier. Revenue jumped 38 per cent to £74.4m.
Fine expressed optimism about early signs of recovery in London's capital markets, noting a pickup in activity. "I think it's nascent," he said, revealing that recent secondary offerings were being snapped up rapidly, with an average time of just 24 minutes until books were closed. He also observed "the odd sign of IPOs coming back."
