Who Benefits from the Chancellor’s New Fiscal Policy?

In a landmark speech Philip Hammond confirmed the Government’s new economic direction. What might this mean long-term for different sectors of the UK stock market?

Cherry Reynard 10 October, 2016 | 12:34PM
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Chancellor Philip Hammond’s speech at the Conservative Party Conference last week confirmed a change in economic direction. Although he continued to talk of fiscal consolidation, there was a loosening of the purse strings for infrastructure development and housebuilding projects, and he reiterated that he would not target a budget surplus by the end of this Parliament.

The early reaction in markets has been difficult to discern amid the ‘flash crash’ of sterling and the concern surrounding the increasingly likelihood of a hard Brexit. Stock markets have continued to climb higher, but more on currency factors. What might the longer-term hold? 

In turning his attention towards fiscal policy as a tool for boosting the UK economy, Chancellor Hammond is following the Japanese government, which recently announced a ¥28.1 trillion ($276 billion) stimulus package. This is also being targeted at infrastructure spending, though some will also go to local councils.

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About Author

Cherry Reynard

Cherry Reynard  is a financial journalist writing for Morningstar.co.uk.