14th Nov 2025 07:00
(Alliance News) - Stocks in London are set to open lower on Friday, as a global sell-off weighs on sentiment and attention turns to UK Chancellor Rachel Reeves's reportedly ditching plans to hike income tax upcoming budget.
IG says futures indicate the FTSE 100 to open 50.1 points lower, or 0.5%, at 9,756.68 on Friday. The index of London large-caps had closed down 1.1% at 9,807.68 on Thursday.
Concerns over the UK fiscal outlook intensified after reports suggested the chancellor has abandoned plans to break Labour's manifesto pledge and raise income tax at this month's budget.
According to the Financial Times, Rachel Reeves has decided to drop plans for an income tax hike due to fears it would anger both voters and Labour backbenchers.
The chancellor had been expected to raise income tax to plug a substantial gap in her spending plans, warning earlier this week that the alternative would be “deep cuts” to public investment.
The FT reported that Reeves informed the Office for budget Responsibility on Wednesday of the “major measures” to be included in her November 26 budget.
An income tax rise would have helped address a fiscal shortfall estimated by some economists at up to GBP50 billion, but it would also break Labour's explicit pledge not to raise income tax, national insurance or VAT.
One alternative measure reportedly under consideration is reducing income tax thresholds while keeping tax rates unchanged, a move that could raise billions of pounds for the Treasury.
Sterling was quoted at USD1.3148 early Friday, down from USD1.3197 at the London equities close on Thursday.
The euro traded at USD1.1635 early Friday, slightly lower than USD1.1644 late Thursday, while against the yen, the dollar was quoted at JPY154.61, up from JPY154.31.
The UK jobs market showed signs of stabilisation last month, according to a report released Friday by KPMG and the Recruitment & Employment Confederation.
The survey showed a slight increase in temporary billings, income recruiters receive from placing temporary workers, while permanent placements declined at a slower pace.
"Economic uncertainty continues to weigh heavy on business, but further stabilisation in the jobs market last month indicates that a budget that builds business confidence, could be a catalyst for renewed hiring," KPMG analyst Jon Holy commented.
The temporary billings index rose to 50.2 points in October from 46.0 in September, climbing back above the neutral 50 point mark for the first time since June 2024.
In New York on Thursday, Wall Street closed sharply lower. The Dow Jones Industrial Average fell 1.7%, the S&P 500 also declined 1.7%, and the Nasdaq Composite dropped 2.3%.
"What likely triggered yesterday's selloff was the growing realization that a full set of jobs and inflation data won't land before the Federal Reserve's (Fed) December meeting. And if that's the case - and if the Fed retains even a minimum degree of independence and reason - it wouldn't cut rates blindly," said Swissquote senior analyst Ipek Ozkardeskaya.
Meanwhile, the White House announced new trade agreements with Argentina, Guatemala, Ecuador and El Salvador. The deals will see the four countries open their markets to US goods, while Washington grants tariff relief on some items.
In Asia on Friday, markets continued to slide. The Nikkei 225 in Tokyo fell 1.9%, the Shanghai Composite in China slipped 0.6%, and the Hang Seng Index in Hong Kong dropped 1.5%. The S&P/ASX 200 in Sydney closed down 1.4%.
Fresh Chinese data showed cooling economic activity overnight, while geopolitical tensions rose after Beijing summoned the Japanese ambassador to protest recent comments by Prime Minister Sanae Takaichi regarding Taiwan.
China's industrial production rose 4.9% year-on-year in October, slowing sharply from 6.5% in September and below FXStreet consensus of 5.5%.
Retail sales increased 2.9%, slightly down from 3.0% in September but above the 2.7% forecast. China's surveyed urban unemployment rate eased to 5.1% from 5.2%.
Japan, meanwhile, reiterated that its position on Taiwan “has not changed” amid a diplomatic spat with Beijing over Takaichi's comments implying that an armed attack on Taiwan could prompt Japanese military support.
China summoned Japan's ambassador and warned that any interference in “China's unification cause” would be met with a “hard strike.”
Gold was quoted at USD4,174.50 an ounce early Friday, down from USD4,206.40 late Thursday. Brent oil traded at USD63.81 a barrel early Friday, slightly higher than USD63.14 late Thursday.
In Friday's corporate calendar, Amaroq posts third-quarter results, while Land Securities Group publishes half-year results and Melrose Industries issues a trading statement.
In the economic calendar, German wholesale prices, French CPI, Spanish CPI, and eurozone GDP, employment and trade balance data are due, alongside Canada manufacturing sales.
By Eva Castanedo, Alliance News reporter
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