22nd Jan 2024 11:19
(Alliance News) - Retail stocks started the week on the front foot on Monday, over speculation about potential tax cuts in March.
On Monday morning, Sainsbury's rose 0.7% and Tesco jumped 0.6%. Both Next and Marks & Spencer rose 0.2%, in a positive read across the board.
On Sunday, Jeremy Hunt compared himself to tax-cutting former chancellor Nigel Lawson as he and UK Prime Minister Rishi Sunak dangled the prospect of further giveaways in the spring Budget.
The chancellor said the government's "plan is working" and "we need to stick to it", which "means cutting taxes".
The prime minister pledged his party "will always prioritise tax cuts" to ensure Britons' "hard work is rewarded".
Hunt likened his record to that of late party grandee Lawson, who slashed personal taxation while serving in the Thatcher government.
Writing in the Mail on Sunday, Hunt said: "Just as Nigel Lawson positioned the City of London for the finance boom in the 1980s, this period of Conservative Government has seen the UK positioned for the massive technological boom we're set to see in the coming years."
In his own piece in The Sun on Sunday, Sunak said: "Where we can, we will always prioritise tax cuts to put more of people's money back in their pockets."
On the back of this, retail stocks got a boost.
Susannah Streeter, head of money & markets at Hargreaves Lansdown, said the comments "have inspired a bit of confidence that respite is on the way for the retail sector."
"It'll be a difficult trade off however, given that more money in consumers' pockets is aimed at boosting demand for goods and services, just at the time when the Bank of England is trying to trample down inflation, which is still double the target. Nevertheless, there seems to be a little uplift in appetite for a raft of high street and luxury names, which have suffered due to concerns about aspirational shoppers tightening their belts."
It was only on Wednesday last week that new data from the Office for National Statistics showed that UK consumer prices unexpectedly heated up in December.
The ONS said the consumer price index rose by 4.0% annually in December, the pace of inflation notching up from a 3.9% increase in November. The reading came in hotter than market expectations, with consensus having been for price inflation to cool to 3.8%, according to FXStreet.
The Bank of England will announce its next interest rate decision on Thursday next week.
By Sophie Rose, Alliance News senior reporter
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