FTSE 100 Shrugs as Cut in Corporation Tax is Delayed

FTSE 100 price, Brexit news and analysis:

  • UK Prime Minister Boris Johnson has shelved a proposed cut in corporation tax, arguing that more money needs to be spent on public services.
  • That might have been expected to hit the London stock market but share prices have continued to climb.

FTSE 100 outlook positive despite business tax cut delay

UK Prime Minister Boris Johnson has decided to delay a cut in corporation tax previously planned as he comes under pressure to spend more on public services.

In a bizarre development in the runup to the UK General Election on December 12, a government minister explained in a radio interview that this was due to the “Laffer Curve” effect – a controversial economic concept suggesting that cutting tax rates can increase total tax revenues up until a certain point at which revenues start to decline.

The interviewer – fortunately a former BBC economic editor – was forced to explain this theory to those listeners without a qualification in economic theory.

As a general rule, news of a delay in a cut in corporation tax might have been expected to lower UK share prices but they continued to rise, implying some underlying strength.

FTSE 100 Price Chart, Five-Minute Timeframe (November 19, 2019)

Chart by IG (You can click on it for a larger image)

Brexit Glossary – Brexit Jargon and Terms Explained

Meanwhile, data suggesting that Boris Johnsons Conservative Party has a 13-point lead over Labour according to an average of comparable general election polls from the last seven days has been well received in the London stock market, which generally prefers Conservative governments.

The poll of polls, compiled by PA Media, puts the Conservatives on 42%, with Jeremy Corbyns Opposition Labour Party behind on 29%.

Brexit Timeline – The Path Ahead

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— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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