The UK government’s decision to reduce the amount of profit that lenders can offset by losses caused mild market jitters yesterday, with British bank shares suffering as a result.
Shares in Lloyds, Barclays and HSBC each fell by 1p, to 80p, 243p and 632p respectively. RBS saw the biggest lost, with shares dropping 8p to 390p.
Chancellor George Osborne announced that offsets would be kept to a maximum of 50%, while relief on bad debts would be delayed. This, he said, would raise £4 billion for the Treasury over the next five years.
Overall the FTSE was down 0.4% by the end of Osborne’s speech.
While the banking sector may have misgivings, other changes outlined in the Autumn Statement are more in line with public sentiment. The top rate of tax was raised to £42,000 and stamp duty reformed so that those buying a house priced under £937,000 will pay far less, while those over the threshold will pay more.
However, many have expressed concerns about the cuts that have been introduced in order to cover the cost of the changes, with some commentators pointing out that these take the UK back to levels of public spending not seen since the 1930s.
While they are no doubt likely to appeal to the Conservative Party’s core voter demographic of higher income homeowners, there is less indication that the changes will stem the country’s rising inequality – or the economic dangers that this entails.
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