Rachel Reeves is anticipated to unveil a package of up to £30bn in tax rises and spending cuts - Simon Dawson/No 10 Downing Street Rachel Reeves is plotting a dozen tax rises in tomorrow’s Budget as she tries to repair Britain’s dire public finances.
The “smorgasbord” of tax hikes is expected to include a raid on pension contributions, a gambling tax, a tourism tax and a pay-per-mile charge on electric cars.
The Chancellor is likely to extend the freeze on income tax thresholds to 2030, a phenomenon known as fiscal drag, which is expected to raise the Treasury £8.3bn.
Rachel Reeves is anticipated to unveil a package of up to £30bn in tax rises and spending cuts on Wednesday. It comes after a record £40bn tax raising maiden Budget last October.
Ms Reeves will also confirm that she is retaining the 5p cut in fuel duty, according to The Times.
Continuing the relief for another year is estimated to cost the Exchequer £3bn.
In an attempt to lower household energy costs Ms Reeves is expected to remove several green levies currently levied on bills.
Labour has pledged to cut energy bills by £170 by the end of the parliament. However, net zero levies backed by Ed Miliband, the energy secretary, are increasing household costs.
The removal of green levies is likely to be funded by reducing the government’s £13bn Warm Homes Fund, which is used for energy efficiency measures.
06:15pm
Signing off...
That’s all from us today, but you can read The Telegraph’s latest business and economics news here. Have a lovely evening.
05:51pm
Tourist tax is a move towards ‘greater fiscal devolution’
The announcement that mayors will be granted the powers to introduce an overnight levy on visitors is a step towards giving areas “greater fiscal devolution”, according to the County Councils Network.
Councillor Natalie Oliver, economic growth spokesperson for the County Councils Network, said: “Confirmation that areas will be able to adopt a voluntary mayoral overnight stay levy, for those that wish to introduce it, is a step in giving places greater fiscal devolution to potentially enhance infrastructure and support local economic growth.”
She added that mayors would need to examine the impact of a tourist tax on their local areas to determine if they should impose the levy.
Ms Oliver said: “It is important to recognise that frontline council services will not benefit if the proceeds are retained solely by mayoral strategic authorities. Therefore, it should be made available to councils, and in all areas which wish to utilise it.”
05:30pm
Shares in London close higher of the Budget
Stock markets rallied to end the day higher as investors await tomorrow’s Budget announcements.
The FTSE 100 rose 0.8pc to close at 9,609.53. Shares in banks made gains following reports that the Chancellor will spare the sector from a tax raid.
Story ContinuesNatWest rose 3.9pc to 604.8p, Lloyds added 3.8pc to 90.7p and Barclays gained 2.4pc to 410p.
Kingfisher, the owner of B&Q, climbed 6pc to 310p after it upgraded its annual profits guidance.
The FTSE 250 added 1pc to finish at 21,617.41.
04:40pm
Milkshake tax is a ‘vital shake-up’
The announcement of a new milkshake tax will encourage companies to reformulate their products with lower sugar, according to the Health Foundation.
Jason Strelitz, from the Health Foundation, said: “It is a vital shake-up, as these products are often marketed to children as healthy alternatives, yet are contributing to increasing obesity levels.
“Alongside the tax raising benefits, the bigger benefit of these measures is as an incentive for industry to reformulate.”
The organisation said it welcomed the government’s plans to extend the Soft Drinks Industry Levy to include milk-based and milk-substitute drinks.
They added that 62pc of public supports the introduction of a tax on organisations that produce foods high in sugar or salt, where some of the revenue is used to fund fresh fruit and vegetables for low-income families.
The Soft Drinks Industry Levy currently applies to drinks such as Coca-Cola and Irn Bru, with producers paying at least 18p per litre on soft drinks containing 5g of sugar or more per 100ml.
04:20pm
Levy on milk-based drinks will create ‘a confused tax landscape’
Plans to introduce a milkshake tax risks making the levy on sugary beverages more complex, according to the Institute of Chartered Accountants in England and Wales (ICAEW).
Ed Saltmarsh, from ICAEW, said: “The success of the original soft drinks industry levy was built on its simplicity and the clear incentive it created for reformulation. Introducing complex allowances for milk-based drinks risks undermining that simplicity.”
He added that extending the levy for sugary drinks to milk products “creates a confused tax landscape”.
Mr Saltmarsh said: “If the government believes the health harms of sugar outweigh the nutritional benefits of milk, it raises questions about why other high-sugar categories, such as pure fruit juices and smoothies, remain entirely exempt despite often containing more sugar than the drinks being targeted by the threshold change.”
The Soft Drinks Industry Levy applies to drinks such as Coca-Cola and Irn Bru, with producers paying at least 18p per litre on soft drinks containing 5g of sugar or more per 100ml.
The Treasury confirmed that the threshold will be lowered to 4.5g of sugar from April 2027 and will be extended to “pre-packaged milk-based drinks with added sugar, like bottled milkshakes and coffee drinks”.
04:02pm
Holiday tax will ‘make life more expensive for working people’, warns UKHospitality
UKHospitality has said the introduction of a tourist tax undermines the Government’s pledge to reduce the cost of living.
The trade group hit out at the announcement that the Chancellor would clear the way for mayors to impose an overnight levy on visitors.
Kate Nicholls, chair of UKHospitality, said: “The Government has gone back on its word and introduced a damaging holiday tax. This is the wrong way to make policy and the fastest way to undermine investment.
“It has blatantly disregarded the commitments it gave to the House of Commons just two months ago that it ‘had no plans’ to introduce this tax.”
Ms Nicholls added that the cost of the tourist tax “will be passed directly onto consumers, drive inflation and undermine the Government’s aim to reduce the cost of living”.
UKHospitality said a 5pc tourist tax, set at the same rate as Edinburgh’s overnight levy, could cost consumers up to £518 million in additional tax.
03:42pm
Tourist tax funds must be reinvested in local services, says leader of Westminster City Council
The Labour leader of Westminster City Council has said that a “significant portion” of the money raised from a tourist tax must be reinvested in local services.
Councillor Adam Hug, the leader of Westminster City Council, said: “My borough has been campaigning for an overnight levy for many years. We have a daytime population of a million compared to a resident population of just over 200,000 and Westminster spends around £115m a year servicing the visitor and commuter economy.
“It is only right to ensure that a significant portion of the money raised from an overnight levy is reinvested in the local services the visitor economy depends on - that’s ensuring our streets are kept clean and safe, and making sure there is a welcoming environment for visitors to Westminster and London.”
Mr Hug added that a levy on overnight stays must have “a clear link to protecting and improving local services”.
He said: “It is essential that the Government ensures Mayors split the revenue with the local councils in their area to support these services, without which economic growth will suffer.”
03:28pm
Tory Teesside Mayor pledges not to use tourist tax
The Tory Mayor of Teesside said he would not be using a “tourist tax” if the Chancellor clears the path for the powers as expected in the Budget.
Lord Houchen pledged there would be “no tourist tax in Teesside, Darlington and Hartlepool for as long as I’m Mayor”.
He added: “Thanks, but no thanks.”
Mayor of London Sir Sadiq Khan had lobbied the Treasury for the powers to impose the tax. Rachel Reeves is expected to announce a consultation on the plan in the Budget on Wednesday.
03:18pm
EasyJet boss warns tourist tax will hit visitor numbers
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The boss of easyJet said the imposition of a tourist tax on overnight stays would inevitably hit visitor numbers that make a vital contribution to the economy.
Chief executive Kenton Jarvis said: “Any increase in tax that impacts the competitiveness of the UK visitor economy would not be a good thing. Tourists have a choice about whether they go shopping in London or Paris or Amsterdam.”
EasyJet flew 15m tourists into Britain last year who went on to spend around £10bn, or about £660m per person, Mr Jarvis said. More than half of those were visiting regions outside London.
Mr Jarvis, who said he also fears that the Chancellor will increase the air passenger duty departure tax, said the imposition of levies on people flying to and from Britain contradicted the Government’s enthusiasm for the expansion of airports including Heathrow and Gatwick.
He said: “What I’d like to see is some joined up thinking. One of the things the Government has done is come out with a pro-growth agenda and it’s been good to see the fact that they understand that for an island economy aviation is an economic enabler.
“But these taxes will naturally dampen demand, which doesn’t feel very joined up in that at the same time you are trying to persuade airports to build new runways. There need to be customers there for the aircraft to take off.
“Governments like Germany have realised that you can’t keep on increasing this without having a big impact on demand.”
Rachel Reeves visited an easyJet simulator in September - Simon Walker/HM Treasury 02:57pm
Milkshake tax is ‘blow to firms drowning in complex taxes’
A milkshake tax that will be imposed on sales of sugary drinks will “pile on the administrative burden” for companies the Chancellor needs to boost growth, bosses said.
Nick Garside, VAT partner at law firm Menzies, said the plans to end the exemption for milk-based drinks from taxes on sugary beverages was “another blow to businesses already drowning in complex taxes and soaring fixed costs”.
“While the levy targets only packaged drinks, not fresh café-made shakes, it still shakes up a struggling sector, and piles on administrative burden and cost at a time when margins are already diluted and consumer demand dwindles,” he said.
“If the Government is serious about boosting the economy, it should be easing financial pressures on businesses and consumers, not reaching for revenue at the first opportunity.”
Mike Salem of the US lobby group Consumer Choice Center, said: “The sugar tax has proved to be ineffective.
“Yet the Government is doubling down, disproportionately affecting the worse off to push its own agenda. It is an unfair tax, and leaves people worse off.”
He added: “Instead of relying on yet another tax that punishes ordinary people, the Government should focus on empowering consumers with better information and real choice.”
02:41pm
Wall Street mixed as Nvidia plunges
US stocks lacked direction at the opening bell as long delayed official data showed a rebound in wholesale inflation.
The Dow Jones Industrial Average was up 0.7pc to 46,766.89 while the benchmark S&P 500 edged 0.1pc higher to 6,713.21.
Producer prices, which measure wholesale inflation, rebounded in September by 2.7pc, which was slightly higher than the 2.6pc forecast by analysts.
However, the tech-heavy Nasdaq Composite slumped by 0.3pc to 22,795.88 after AI chip giant Nvidia plunged 5.2pc.
The world’s most valuable company fell after it merged Facebook owner Meta was in talks to invest in chips made by Google-owner Alphabet. The latter’s shares rose 2.5pc.
02:20pm
Hotel tycoon attacks Reeves’s ‘deeply unfair’ tourist tax plan
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Plans for a tourist tax had provoked strong opposition from the hospitality industry.
Hotel tycoon Sir Rocco Forte last week attacked Labour plans for a Venice-style tourism tax across England, branding it “deeply unfair”.
The luxury hotelier, who is behind the Balmoral Hotel in Edinburgh and Brown’s in London, said it would be “beyond belief” if the Chancellor unveiled a new holiday tax in her Budget next week.
The Chancellor is understood to be preparing to hand mayors in England new powers to charge tourists for staying overnight in their cities. It would bring England in line with Scotland and Wales, where nightly tourism taxes have already been introduced in some areas.
Sir Rocco Forte had warned would be beyond belief if Rachel Reeves introduces a tourist tax - Rii Schroer 02:02pm
Reeves to announce stamp duty holiday for new stocks
Rachel Reeves will announce a three-year stamp duty holiday for new listing on the London Stock Exchange as she seeks to boost the number of listings in the City.
Investors will not have to pay the tax on buying shares of newly listed businesses in London, the Chancellor will say in the Budget, according to Bloomberg.
Ms Reeves set up a task force in July charged with finding ways to arrest the decline of companies choosing to float in the UK.
Britain used to be among the top five locations for initial public offerings, known as IPOs, but this year slipped out of the top 20.
Just £184m was raised in IPOs on the London Stock Exchange in the first nine months of this year.
Stamp duty on share purchases is currently charged at 0.5pc.
01:39pm
Coffee shops to be spared from milkshake tax, ministers confirm
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Coffee shops will be spared from the milkshake tax in the Budget, ministers have confirmed.
The Government has announced that it will end the exemption that milk-based drinks currently have from taxes on sugary beverages.
But ministers confirmed that “open-cup” sugary drinks that are prepared in cafes and bars will remain exempt.
The Soft Drinks Industry Levy applies to drinks such as Coca-Cola and Irn Bru, with producers paying at least 18p per litre on soft drinks containing 5g of sugar or more per 100ml.
The Treasury confirmed that the threshold will be lowered to 4.5g of sugar from April 2027, as well as bringing in scope “pre-packaged milk-based drinks with added sugar, like bottled milkshakes and coffee drinks”.
The consultation response published by The Treasury on Tuesday said: “‘Open-cup’ milkshakes prepared in cafés, bars, etc will remain out of scope; as will plain cow’s milk, and other milk drinks without added sugar.”
01:19pm
Don’t trust ‘tone deaf Labour,’ says AO World boss
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Business cannot trust “tone deaf” Labour, the boss of electrical chain AO World has said, as Rachel Reeves prepares to launch a fresh tax raid at her Budget this week.
John Roberts accused the Labour party of having “zero appreciation for what business contributes to the wider economy and how to drive growth”, adding: “I think the Government is absolutely and utterly tone deaf.”
Mr Roberts, the founder and chief executive of electrical giant AO World, said businesses had been “demonised by this government”.
He said businesses needed a government that they can trust, adding: “I don’t think you can trust this government.”
It comes after a series of U-turns by Labour since coming into power. Earlier this year, the Chancellor attempted to deliver £5bn of welfare savings, but was forced to backtrack following pressure from MPs.
Meanwhile, Ms Reeves last year claimed her record £40bn Budget was a one-off, promising she was “not coming back” for more.
However, she has since signalled that she will need to increase taxes once again when she delivers her second Budget on Wednesday.
It has sparked a growing backlash from business chiefs.
On Monday, the boss of the Confederation of British Industry said Labour needed to get a grip on spending rather than ramping up taxes.
Mr Roberts said he agreed with the comments, adding: “The narrative is tax more, spend more, waste more.”
The boss of AO World said he does not think Labour can be trusted - REUTERS/Carl Recine 01:00pm
Reeves to clear path for tourist tax in Budget
Rachel Reeves will open the door for Sadiq Khan to impose a “tourist tax” on visitors to London, it has been reported.
The Chancellor will announce in the Budget a consultation on allowing local leaders to charge a levy on overnight stays in English cities, according to Bloomberg.
Visitors will pay around £2 a night for stays in hotels or at venues through providers like Airbnb, subject to the consultation.
Mayor of London Sir Sadiq has urged the Treasury to devolve city tax powers, allowing charges similar to many other major European and US cities.
There were 89m overnight stays in London last year. A think tank Centre for Cities argued that such a levy would be unlikely to cause a significant drop in visitors.
The Treasury has been contacted for comment.
12:38pm
Pound edges up as traders hedge their bets before Budget
The pound was on track for its fourth daily rise as traders hedge their bets ahead of the Budget.
Sterling which is heading for a 4.8% gain this year, last traded up 0.1pc against the dollar at $1.312. It was up 0.1pc against the euro, which is worth just under 88p.
The cost of hedging against a large overnight swings in the price of the pound against the euro earlier shot to its highest since Donald Trump’s tariff onslaught in April.
Francesco Pesole, currency analyst at ING, said: “This signals that, despite some recovery in back-end gilts, the currency market remains concerned ahead of tomorrow’s UK budget announcement.”
12:06pm
Rachel Reeves warned of business exodus after Budget
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Rachel Reeves will suffer an exodus of talent to the US unless she addresses a crisis facing the UK’s fastest-growing businesses in Wednesday’s Budget, Labour backers have warned.
In an open letter to the Chancellor on the eve of the Budget, a Labour MP, pressure groups and business leaders urged Ms Reeves to tackle the “valley of death” facing UK entrepreneurs.
It warned that current growth incentives were “inadequate” and contributing to a “structural failure” in the UK’s investment climate that was damaging the economy.
11:50am Pictures
Pictured: Protesters outside Parliament demand wealth taxes
Protesters outside Parliament call for wealth taxes in the Budget - Carl Court/Getty Images A cross party group of MPs has also lobbied for the introduction of wealth taxes - Guy Smallman/Getty Images Labour MP Brian Leishman, left, Green MP Ellie Chowns, second left, and Green Party leader Zak Polansk, right, joined the protesters - Guy Smallman/Getty Images 11:38am
UK stocks rise ahead of Budget
UK stocks edged higher as investors waited to see where the axe will fall in the Budget.
The blue-chip FTSE 100 edged higher 0.3pc, while the FTSE 250 index of domestically oriented UK companies rose 0.2pc.
Banks gained 0.5oc after reports that lenders would be spared from tax rises. Lloyds Banking rose 1.8pc, NatWest Group climbed 1.7pc and Barclays added 1.5pc.
Retailers added 1pc despite the CBI warning of a sharp decline in confidence ahead of the Budget. The sector was boosted by a 5pc jump from B&Q owner Kingfisher, which led gains on the FTSE 100 after it raised its annual profit forecast.
AO World rose 5.9pc after the company raised its annual profit forecast for the second time in three months.
Markets were also awaiting the release of US producer inflation and retail sales figures, which are among the first major data to be released following the longest-ever government shutdown.
Speciality insurer Beazley plunged 9.4pc after the company cut its annual insurance written premiums forecast.
11:29am
High street confidence plunges in run-up to Budget
Confidence among retailers sank at the steepest pace since the global financial crisis as they awaited tax rises in the Budget.
Sentiment on the high street dropped at the sharpest rate in 17 years this month in the run up to Rachel Reeves’s speech, the CBI’s latest quarterly data showed.
The business lobbying group said retailers were planning to pull back on investment and hiring as a result of the mounting uncertainty.
Retailers expect demand to remain subdued heading into December, with sales set to fall again, the Distributive Trades Survey said.
Alpesh Paleja, deputy chief economist at CBI, said: “Retailers continue to grapple with a long spell of weak demand, as households remain cautious around day-to-day spending.
“With all eyes on the forthcoming Budget, uncertainty in the run-up has meant that businesses are holding back on plans for investment and hiring.
“The Chancellor must avoid pulling the business tax lever once again, at risk of further curtailing firms’ efforts to build a more resilient, dynamic economy.
“Businesses want bold decisions to wrestle back the government’s fiscal headroom and get the economy on a solid path to prosperity. This includes finding a landing zone for the Employment Rights Bill that doesn’t harm job prospects or shortchange economic growth.”
11:00am
B&Q owner warns of ‘negative’ UK market ahead of Budget
B&Q owner Kingfisher led gains on the FTSE 100 even after it warned it faced weaker market conditions in the UK ahead of the Budget.
Shares in the group, which runs more than 1,800 stores globally, jumped 4.8pc as it increased its profit target for the year.
Kingfisher told shareholders that it is on track to deliver annual pre-tax profit of between £540m and £570m amid stronger demand for big-ticket spending.
It had previously guided towards a range of between £480m and £520m.
The group said the upgrade came despite “softening market conditions” in the UK and Poland over the third quarter.
Group like-for-like revenues increased by 0.9pc to £3.3bn for the three months to October 31, compared with the previous year.
Like-for-like sales were up 3pc to £1.7bn in the UK and Ireland over the quarter.
The company said the wider UK market had been “slightly negative” over the quarter, saying it continues to be “mindful of inflation, uncertainty ahead of the autumn Budget and the softening labour market”.
10:37am
Traders steepen bets against the pound
Traders are ramping up protection against falls in the pound as Rachel Reeves’s Budget speech moves closer.
Data from CME Group show traders positioning cautiously ahead of the Chancellor’s speech, with stronger demand for protection against a drop in sterling against the US dollar.
Some 81.9pc of trades were made up of so-called put options, protecting against falls in the pound. Just 19.1pc were call options wagering sterling will rise.
10:16am
Cleverly: Prepare for ‘whole load of stealth taxes’
Shadow housing secretary Sir James Cleverly said the prospect of tax rises looked like Labour MPs “bossing around” the Chancellor and predicted “a whole load of stealth taxes”.
“What we’re seeing from the Labour Party is these weird contortions because Rachel Reeves is trying to ramp up taxes. Her backbenchers are basically bossing her around,” he told Times Radio.
“The promises, so-called promises that she and Keir Starmer made during the election are boxing her in.
“So I suspect what we’re going to see in tomorrow’s Budget is a whole load of stealth taxes, a whole load of ways to try and squeeze more money out of hardworking people, including people who don’t live in mansions, but they just live in family houses that happen now to have increased in value.
“And they will be penalised because of their ineptitude.”
09:59am
Wealthy Britons fear Budget tax raid
Many rich Britons are fearful that the Chancellor will launch a tax raid on the wealthy as part of her Budget.
It comes as Rachel Reeves is widely expected to announce a change to the UK’s property tax system as the Treasury moves to target higher value homes as part of a so-called mansion tax. This is thought to include a surcharge on council tax paid on homes in the highest three bands of property values.
The Chancellor is drawing up plans to reassess council tax to target wealthy households, who are reportedly set to face a new property surcharge of £4,500.
This will impact properties worth more than £2m, with Ms Reeves having reportedly increased the threshold from £1.5m after pressure from backbench Labour MPs.
Expensive homes in bands F, G and H will be revalued in order to determine who is eligible to pay the tax.
The surcharge is expected to affect more than 100,000 of the nation’s most valuable homes, mainly hitting families based in London and the South East.
However, it is unlikely to be implemented until at least 2028 when the revaluation has been completed.
People may be allowed to defer paying the new tax until they move house or after they die. However this would result in some families being hit with another layer of inheritance tax when their loved ones die, on top of the existing 40pc death duty.
The measure is expected to be part of a so-called “smorgasbord” of tax rises in Wednesday’s Budget, as the Government seeks to raise as much as £30bn to fix the public finances.
09:40am
Traders brace for turmoil in pound
Currency traders are paying the highest premium to protect themselves against swings in the pound since Donald Trump’s tariff onslaught seven months ago.
Overnight volatility in sterling against the euro hit its highest level since April as traders hedged against short term swings in the value of the pound, according to Bloomberg.
Investors are taking no chances ahead of the Budget, which could be the defining moment for the Chancellor’s plans to fix the public finances.
Richard Potts, economist at Bondford, said: “For currency traders, the Budget will serve as a real-time credibility test.
“A rally in sterling is unlikely given the expected fiscal tightening, but if the pound holds its ground, it will signal that investors see the Chancellor’s measures as credible and sufficient to stabilise the public finances without necessarily derailing growth.
“Much will depend on whether forthcoming budget measures prove inflationary or disinflationary. Targeted tax cuts, particularly on energy, could ease price pressures, while a repeat of last year’s measures that increased costs for businesses risk reigniting them.”
“The risk is that markets perceive an over-reliance on revenue-raising measures that either dampen economic activity, or have the potential to be watered down by Parliament.
“A repeat of last year’s stop-start fiscal cycle - where u-turns on spending cuts and counterproductive tax rises forced another mid-year adjustment - would damage confidence further and likely push sterling lower.”
09:17am
Bank stocks rise as lenders expected to avoid tax blow
Shares in UK-listed banks rose in early trading after reports they would likely be spared a tax raid in the Budget.
Banks were up 0.9pc across the FTSE 100 and FTSE 250 as Rachel Reeves is expected to avoid placing higher taxes on the financial sector.
Lenders had reportedly warned the Chancellor that increased levies could curtail lending to small businesses.
Barclays gained as much as 3.2pc while Lloyds Banking Group rose as much as 3pc.
09:08am
Reeves will have ‘few levers left’ if she needs to raise taxes again
Rachel Reeves will have “very few levers left” to pull if she needs to raise taxes again in the Budget next year, a fund manager has warned.
John Stopford, head of managed income at FTSE 250 asset manager Ninety One, said the Chancellor had to “pull off a difficult balancing act” to satisfy Labour backbenchers, voters and bond vigilantes.
However, he warned of the risks of failing to stabilise the public finances sufficiently with her “smorgasbord of smaller tax changes on larger properties, pension contributions, EVs and taxi fares”.
He said: “This should allow the OBR to project around £15bn of headroom under the current fiscal rules. Freezing rail fares and cuts to VAT and levies on energy costs are expected to help to bring down inflation in 2026.
“Given the Chancellor’s apparent limited room for manoeuvre, this is probably as good an outcome as we can expect, and there is a chance that if she can avoid a ‘pasty tax’ moment, we could be in a more virtuous cycle for a while, with not much of an additional drag to growth, some easing of the pressure on the government, a mollified backbench, a satisfied Gilt market given low expectations, and more reasons room for the Bank of England to cut rates.
“Having said that, however, any window of greater optimism may be short lived, with the government still looking very unpopular ahead of next May’s elections, few signs of a pickup in growth, and a Chancellor with very few levers left if more tightening is needed next year.”
08:35am
Europe stocks edge up ahead of US figures
Away from Britain, European shares were subdued ahead of US economic data which was delayed by the federal shutdown.
The pan-European Stoxx 600 gained 0.2pc, France’s Cac 40 rose 0.3pc and Germany’s Dax gained 0.1pc.
Markets await the release of a producer inflation report and retail sales figures in the US, which can shed more light on the health of the American economy.
The data will be among the first to be released after the longest government shutdown in US history denied investors and the Federal Reserve of official information on the health of the world’s largest economy.
Banks were the biggest boost to the European index, up 0.4pc. Commodity-linked stocks such as oil companies and miners gained 0.7pc and 0.6pc, respectively.
08:22am
Reeves faces ‘difference’ in criticism as first female chancellor
Rachel Reeves faces a “difference” in the criticism she faces as Britain’s first female chancellor, a minister said.
Health minister Karyn Smith was asked whether there should be more focus on “competence and success” than “identity politics”, or whether she thought it was true that Ms Reeves had faced misogyny.
“Look, Rachel is well able to challenge and relishes the challenge that she has got as the first female Chancellor,” she told Times Radio.
“I think both things can be true. I think absolutely, I’m often in a situation where I’m the only woman in the room.
“That happens to Rachel a lot in her world, but all chancellors face a lot of criticism. She’s well up for that challenge, able to face that down.
“I think it is inspirational to lots of young women, particularly she’s the first Chancellor, woman Chancellor in 300 years, something she’s very proud of, and rightly so. With that comes a lot of criticism.
“Every single Chancellor gets criticism... I think there is a difference for a woman Chancellor as well, absolutely, for all women politicians, that not new or unusual.
“But you know, those of us who are in senior positions in politics, we’ve got to crack on with it. We’re focused on it: it is one of those things that you have to deal with.
“I hope it changes - and our job is to inspire another generation, which I know Rachel does do, to to get involved and change that situation.”
08:03am
UK stocks rise ahead of Budget
Stock market investors in London remained cautious in the run-up to the Budget.
The FTSE 100 opened 0.1pc higher at 9,545.39 while the mid-cap FTSE 250 climbed 0.3pc to 21,423.22.
The UK’s benchmark index closed down 0.1pc on Monday, while the FTSE 250 rose 0.2pc.
07:53am
Health minister calls obesity ‘major challenge’ amid ‘milkshake tax’ rumours
A health minister said “obesity is the major challenge of our health service for this generation”, amid reports the Government will introduce a so-called “milkshake tax” on sugary packaged drinks.
Karin Smyth said that any tax measures would be set out in the Budget when asked whether tackling obesity was more important than raising revenue.
But she added: “The wider point is about tackling obesity, which we know is one of the biggest causes of ill health, and therefore demand on the health service.”
“Measures we’ve already announced as part of the manifesto, to reduce junk food advertising, particularly to protect young people from becoming obese, because if you come obese at a young age, it does limit your life chances,” she said.
“So tackling obesity is a central plank of prevention, which is one of our three shifts in the NHS, which we announced in the 10-year plan, as is getting down these waiting lists.”
Ms Smyth added: “Obesity is the major challenge of our health service for this generation, and it is important that we make sure that we create the healthiest young generation of children coming forward.
“That’s why we are trying to we’re getting through, for example, the Tobacco and Vapes Bill.
“So it’s important to balance public health and work with industry to make sure that happens.”
07:46am
Wealthy homeowners rush to protect property ahead of tax raid
Wealthy homeowners are rushing to protect their property from a tax raid ahead of Wednesday’s Budget.
One in four (25pc) high net worth individuals has placed property in trust to pass on to their children, according to a survey by Saltus, a wealth management firm.
A further 12pc of the 2,000 respondents, all high net worth individuals with assets of over £250,000, said they had done the same for their grandchildren.
Henrietta Grimston, a chartered financial planner at Saltus, said concerns about tax changes ahead of the Budget were “clearly front of mind for many high net worth families”.
The Chancellor is reportedly drawing up plans to to target homes worth over £2m in council tax bands F, G and H with a new property surcharge of £4,500.
Ms Grimston added that many of Britain’s wealthiest were setting up trusts and making gifts to children both to “reduce potential tax liabilities” and also “to ensure their wealth is handled responsibly”.
Trusts are used in financial planning to reduce inheritance tax liabilities and pass assets on to family members.
07:42am
Good morning
Thanks for joining me. Currency traders are betting against the pound in the run-up to the Budget where Rachel Reeves is expected to lay the ground for interest rate cuts.
The scale of bets on so-called put options, which are used to speculate or hedge against a fall in sterling, have far outstripped wagers on the pound rising, according to CME Group.
Puts outweighed so-called call options, used to bet on the pound rising, by four to one over the last week, the data showed. It was first reported by the Financial Times.
Matthew Ryan, an analyst at payments firm Ebury, warned investors to “brace for volatility in sterling this week”.
The Chancellor will try to reassure bond vigilantes that her Budget can put the public finances on a steadier footing.
Earlier this month, Ms Reeves told a press conference in Downing Street that she would “do what is necessary to protect families from high inflation and interest rates”.
Lower inflation and rates would be expected to send the pound lower in the short term. Here is what you need to know.
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4. Benefits claimants cut off from BMWs and Mercedes in Motability scheme | Taxpayer-subsidised scheme says it will stop offering the luxury models “immediately”
5. Asda suffers debt downgrade as turnaround falters | Supermarket’s profits are predicted to fall more than expected as it ploughs more money into price cuts
What happened overnight
Asian shares mostly gained on Tuesday after US stocks rallied on hopes the Federal Reserve will cut interest rates soon.
Tokyo’s Nikkei 225 was nearly unchanged at 48,628.85, after reopening from a holiday.
A plunge in technology giant SoftBank’s shares weighed on the market. It fell 10.3pc on concerns that returns from its heavy investments in OpenAI may be threatened by the next generation Gemini artificial intelligence model that Google launched last week.
In South Korea, the Kospi gained 0.3pc to 3,859.12. Taiwan’s Taiex jumped 1.5pc.
Chinese markets also advanced. In Hong Kong, the Hang Seng climbed 0.4pc to 25,821.47, while the Shanghai Composite index jumped 0.9pc to 3,872.45.
E-commerce giant Alibaba, which was due to report its earnings late Tuesday, gained 1.6pc.
Australia’s S&P/ASX rebounded to edge 0.1pc higher, closing at 8,537.00.
US stocks surged on renewed hope for an artificial intelligence revolution and mounting expectations for a December interest rate cut from the Federal Reserve.
The US benchmark S&P 500 rose by 1.55pc, the tech-heavy Nasdaq Composite surged by 2.69pc and the Dow Jones Industrial Average rose by 0.44pc.
Tech stocks performed particularly strongly, with shares in Alphabet, Google’s parent company, surging by 7.1pc to an all-time record high of $317.69. Google last week announced an upgraded version of its AI model, Gemini 3, which has helped to reverse investor fears that the company was losing its edge on AI to OpenAI.
Yields on 10-year US Treasuries declined by two basis points to 4.05pc, while yields on 10-year British gilts dipped by one basis point to 4.54pc.
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