6th Aug 2025 06:54
(Alliance News) - London stocks are set to open higher on Wednesday, as investors are warned on potential UK tax hikes and ahead of a US-Russia meeting.
IG says futures indicate the FTSE 100 to open up 41.8 points, 0.5%, at 9,184.53 on Wednesday. The index of London large-caps closed up 14.43 points, 0.2%, at 9,142.73 on Tuesday.
The chancellor must resort to "moderate but sustained" tax rises to help repair the UK's public finances as she faces missing one of her fiscal rules by more than GBP40 billion, an economic think tank has warned.
The National Institute of Economic & Social Research said weaker-than-expected recent economic activity, U-turns on welfare cuts and forecast-beating borrowing have combined to create a "worsening fiscal outlook".
Rachel Reeves is now set for a GBP41.2 billion shortfall on her "stability rule" in 2029-30 and has been left with an "impossible trilemma" of trying to meet her fiscal rules while fulfilling spending commitments and upholding a manifesto pledge to not raise taxes, it said.
She will need to raise taxes or cut spending in the autumn budget to plug the gap, Niesr cautioned.
This comes despite Niesr nudging up its economic outlook for the UK, with growth of 1.3% now pencilled in for 2025, up from 1.2% forecast in May. But the group cut its prediction for next year – to 1.2%, down from 1.5% previously expected.
Sterling was quoted at USD1.3305 early Wednesday, slightly higher than USD1.3301 at the London equities close on Tuesday.
The euro traded at USD1.1577 early Wednesday, broadly flat against USD1.1579 late Tuesday. Against the yen, the dollar was quoted marginally higher at JPY147.48 versus JPY147.42.
A record number of solar panels, batteries and heat pumps have been installed in UK homes and buildings in the first six months of 2025, figures show.
Data from Microgeneration Certification Scheme, the quality mark for small-scale renewables, found there were more than 172,000 certified installations between January and June this year.
That is up 37% from the same period in 2024 and a third above the previous record high start to the year, in 2023, the figures show. The MCS said the jump in installations was being driven by three technologies: solar panels, electric heat pumps and battery storage.
In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average fading 0.1%, the S&P 500 losing 0.5% and the Nasdaq Composite shedding 0.7%.
The yield on the US 10-year Treasury was at 4.22%, stretched from 4.20%. The yield on the US 30-year Treasury was 4.80%, widened from 4.77% from Monday.
US President Donald Trump has announced a meeting between the US and Russia for Wednesday.
"We have a meeting with Russia tomorrow," Trump told reporters on Tuesday. "We're going to see what happens."
The meeting is set to take place just days ahead of a deadline Trump has given Russian President Vladimir Putin to reach a ceasefire in the war in Ukraine. The US president did not provide further details, including who would attend the meeting.
In Asia on Wednesday, the Nikkei 225 index in Tokyo rose 0.5%. In China, the Shanghai Composite gained 0.3%, while the Hang Seng index in Hong Kong advanced 0.1%. The S&P/ASX 200 in Sydney improved 0.9%.
Gold was quoted at USD3,370.85 an ounce early Wednesday, down from USD3,385.82 on Tuesday.
Brent oil was trading at USD67.99 a barrel early Wednesday, lower than USD68.04 late Tuesday.
In Wednesday's corporate calendar, half year results from miner Glencore, insurance broker Hiscox and insurer Legal & General.
In the economic calendar on Wednesday, eurozone retail sales and construction PMI readings in the UK and across Europe.
By Emily Parsons, Alliance News reporter
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