Business

FTSE 100 ends flat after Autumn Statement

Market trader (file picture) Image copyright Getty Images

(Close): The UK market opened higher but those gains withered as the lunchtime Autumn Statement sharply revised down UK growth prospects.

The Chancellor, Philip Hammond, said growth next year would now by 1.4%, well down on previous forecasts for 2.2% growth.

The FTSE 100 was down 2 at 6817.71.

In the FTSE 250, news of the ban on letting agents' fees hit property stocks hard. Foxtons was among the worst fallers, losing 14%.

Countrywide was down 5% and Berkeley Group down 4%.

News of the ban was described as a "hammer blow" to estate agents.

Neil Wilson, markets analyst at ETX Capital, said: "Estate agents have suffered since the Brexit vote - shares in Foxtons are still trading down around 30% from their pre-referendum level amid falling client activity. Countrywide stock is now worth a third of what it was in May 2015."

Investors' minds were on the prospect of rising inflation with £23bn promised in the Autumn Statement for infrastructure spending.

Bonds fell and yields rose. The rate of return to investors on 10-year British government bonds rose by 0.1% to 1.466%.

Michael Hewson, chief market analyst at CMC Markets, said: "It would appear that bond investors are starting to price in the prospect of higher inflation expectations as he [Philip Hammond] announced extra spending on rail, telecoms and housing as he pushed back plans to balance the books by the end of the parliament."

Dollar up

Away from the Statement, United Utilities was initially among the top risers, up 3%, after it posted a small increase in half-year profits, but those gains eroded throughout the day and it closed with a 1% rise.

Shares in travel company Thomas Cook rose more than 5% despite it reporting a dip in full-year profits.

Underlying earnings fell by £2m to £308m in a year where the travel industry has been affected by terror attacks in Europe and political instability in Turkey.

But the results were slightly better than expected, and Thomas Cook also announced a dividend payment, of 0.5p a share, for the first time in five years.

On the currency markets, the pound rose 0.2% against the dollar to $1.2444, and gained 1% against the euro to €1.1794.