Rishi Sunak toasted by the pubs and leisure sector
|Rishi Sunak has delivered a welcome boost to the leisure and hospitality sector, with a temporary cut in business rates coming alongside a reduction in alcohol taxes. However, the prospect of fiscal tightening does raise questions over the seemingly impending BoE rate hike. In the US, tech stocks have outperformed thanks to a raft of better-than-expected earnings figures.
-
US stocks are the outlier as earnings continue to provide a boost.
-
Pubs receive a double boost as Sunak cuts alcohol taxes and business rates.
-
UK economic forecasts upgraded, but fiscal outlook could make the BoE think twice.
US tech stocks are the one outlier to an otherwise downbeat day in Europe and the US, with gains across Microsoft, Alphabet, and Tesla helping to keep the Nasdaq in positive territory. This highlights the importance of Q3 earnings season as a driver of market upside thus far, with 83% of those S&P 500 names that have reported seeing better-than-expected earnings. Interestingly, the tech sector has been a significant outperformer, with 93% of the 30 reporting tech stocks beating market estimates.
Today’s UK budget brought plenty of cheer for pubs, with the Chancellor cutting alcohol duties and halving business rates next year. The decision to halve business rates for those in the retail, hospitality, and leisure sectors does provide a welcome boost for businesses getting back to normal after a hugely disruptive pandemic period. Meanwhile, the decision to simplify alcohol duties will see taxes cut for drinks such as wine and beer, while plans to raise taxes on spirits have also been scrapped.
The latest OBR forecasts made positive reading for the Bank of England, with both growth and unemployment outlooks upgraded as the economy hopes to leave the scarring effect of the pandemic behind it. With the OBR predicting 2021 growth of 6.5% (up from 4%), the UK economy is expected to return to pre-pandemic levels by the end of the year. However, while the economic outlook is looking up, the Chancellor's push towards fiscal discipline could raise questions for a Bank of England that are predicted to raise rates next week. The idea of raising rates at the same time and fiscal tightening does signal a potential squeeze on an economy that is still getting back on its feet after a hugely damaging 19-months.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.