£600bn infrastructure splurge announced in Budget
More than £600bn will be spent on roads, rail, broadband and housing by the middle of 2025, chancellor Rishi Sunak announced in today’s Budget.
Sunak said the government is tripling its investment in transport and infrastructure spending and claimed this will take it the highest levels since 1955.
“If the country needs it, we will build it,” the chancellor added.
Details include over £27bn to be spent on more than 4,000 miles of roads, £5bn of funding for gigabit-capable broadband, and additional funding worth £640m for Scotland, £360m for Wales and £210m for Northern Ireland.
Chancellor unveils £30bn coronavirus spending plan
Chancellor Rishi Sunak has announced a £30bn spending package to support the UK economy through the coronavirus outbreak.
The fiscal package, which was coordinated with looser monetary policy from the Bank of England.
“Our responses have been carefully designed to be complementary and to have maximum impact, consistent with our independent responsibilities,” Sunak said.
“The government’s response will use fiscal action to support public services, households and business.”
The measures announced include covering the cost of statutory sick pay (SSP) for small and medium-sized businesses for two weeks, a coronavirus loan scheme to cover the cost of salaries and bills, and a pledge to make it “quicker and easier” to get benefits for those not eligible for SSP.
The NHS has also been promised whatever resources it needs to combat the outbreak.
“It is about time the UK showed the rest of the world its stronger colours once again after the Brexit debacle”
TwentyFour Asset Management’s Mark Holman welcomes the Bank of England’s move this morning.
“Our take on all of this is that the central bank has acted in a very targeted and timely way, adding large volumes of liquidity at even lower rates, along with significant capital to the banking system. These measures should meaningfully encourage bank lending, and provide strong support for this very challenging period ahead. From a bank debt standpoint it should be positive, at a time when bank debt has been hit as it is widely seen as high beta, especially so since the financial crisis. We particularly liked Carney’s point as to why this situation is different to 2008 from a banking standpoint. The Bank of England has taken a lead in monetary policies here, now let’s see if the Treasury can impress on the fiscal side. In our view it is about time the UK showed the rest of the world its stronger colours once again after the Brexit debacle. This was a good start.”
FTSE 100 down as coronavirus Budget gets underway
Source: Google Finance
The FTSE 100 was back below 6,000 points as chancellor Rishi Sunak started his first Budget.
As the new chancellor took to the dispatch box, the blue-index was trading at 5,953 points.
This was down 0.38 per cent on where it started the session.
The fall was despite the Bank of England announcing an emergency interest rate cut to 0.25 per cent.
The Bank of England’s emergency rate cut and what it means for investors
Trustnet rounds up what the investment community is saying about the Bank of England’s “comprehensive and timely package of measures” to protect the UK economy against coronavirus.
FTSE opens higher after Bank’s surprise rate cut
The FTSE 100 has jumped immediately after opening, following the Bank of England’s move to cut interest rates to 0.25 per cent.
The index was up 2 per cent within 10 minutes of the trading session starting, rising above the 6,000 mark after a brutal sell-off on Monday left shares bruised.
Rupert Thompson, chief investment officer at Kingswood, commented: “The Bank of England’s emergency 0.5 per cent cut in bank rate to the all-time low of 0.25 per cent follows hard on the heels of a similar move by the US Federal Reserve last week.
“The rate cut itself is probably of most importance symbolically as it is unlikely to be particularly effective in mitigating the looming disruption from the coronavirus. Importantly, however, it is being accompanied by measures to relax capital rules for the banks so they can provide more support for struggling businesses.
“Moreover, today’s Budget will very likely relax controls on day-to-day government spending. This should provide additional support to the economy over coming months. A large increase in investment spending is also planned but inevitable delays in implementing it mean this will be much less helpful in boosting the economy short term.
“Despite these various moves by the authorities, the UK economy - like many other economies round the world - will struggle to escape a short-lived recession over coming months.”
Bank of England makes emergency interest rate cut
The Bank of England has cut interest rates by 50 basis points in a bid to stem the impact of the coronavirus outbreak on the UK economy.
The cut, which takes the base rate from 0.75 per cent to 0.25 per cent, was unanimously backed by the Monetary Policy Committee in an unscheduled meeting on Tuesday.
It is part of “a comprehensive and timely package of measures” announced by the Bank’s three policy committees. It comes ahead of chancellor Rishi Sunak’s first Budget today.
The other elements of the package include a new Term Funding scheme with additional incentives for small and medium-sized enterprises, financed by the issuance of central bank reserves. This could provide more than £100bn in funding.
“The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove sharp and large, but should be temporary,” the Bank said.
“The Bank’s three policy committees are today announcing a comprehensive and timely package of measures to help UK businesses and households bridge across the economic disruption that is likely to be associated with Covid-19. These measures will help to keep firms in business and people in jobs and help prevent a temporary disruption from causing longer-lasting economic harm.”
Gold continuing to act as market safety net
Performance of gold vs global stocks in 2020
Source: FE Analytics
Stephen Innes, global chief markets strategist at AxiCorp, said: