LONDON, Sept 29 — London stocks tumbled today, led by losses in Next shares after the clothing retailer cut outlook citing a worsening cost-of-living crisis, while investors also digested the UK prime minister’s views on the government’s fiscal policy.
The blue-chip FTSE 100 was down 1.8 per cent, while the more domestically-oriented FTSE 250 shed 2.1 per cent, by 0823 GMT.
Shares of Next slid 8.7 per cent after it cut profit and sales forecasts, saying August trading was below expectations and cost of living pressures were set to rise in the coming months.
The wider retailers index dropped 5 per cent.
Britain’s consumer confidence sank to a record low this month, as they struggle with the accelerating cost of living, even before the government’s mini-budget tomorrow roiled financial markets, including the UK’s mortgage markets.
“Consumer staples product sales are going to be hit as though consumers may have some more cash in their pockets from the tax cut, it’s going to be spent on the loans and mortgages which are becoming more costly with rising interest rates,” said Stuart Cole, head macro economist at Equiti Capital.
“Economic policy now is being a mess. It’s indicative that the tighter monetary policy gets the far more damage it will do to UK consumers, UK spending and the UK economy.”
Britain is facing “very, very difficult” economic times and the government had to launch immediate action to ignite economic growth, Prime Minister Liz Truss said in defence of her tax-cutting budget.
Her comments came a day after the Bank of England revived its bond-buying programme to quell a gilts sell-off that threatened pension funds in the country.
Stock markets have been hit globally this year amid worries that aggressive monetary policy tightening to curb stubbornly high inflation could tip economies into recession. The FTSE 100 has lost 6.6 per cent so far this year.
Among other stocks, British American Tobacco fell 3.1 per cent in ex-dividend trading, while Synthomer tanked 32.6 per cent after it lowered its annual profit outlook. — Reuters
