Housebuilders fall after Sir Keir Starmer warns of ‘painful’ Budget

The Prime Minister warned ‘things are worse than we ever imagined’ in a speech on Tuesday about the economy.

Sir Keir Starmer sent housebuilders into the red with his speech on Tuesday (Stefan Rousseau/PA) (PA Wire)

Housebuilder shares sank on Tuesday amid a slight nudge up for the wider FTSE 100, after Sir Keir Starmer’s warning that the Government’s forthcoming Budget will be “painful”.

In a speech in the Downing Street rose garden on Tuesday morning, the Prime Minister claimed his Government has done more in seven weeks than the Conservative government did in seven years.

But he warned “things are worse than we ever imagined” because of a £22 billion “black hole” in the public finances, claiming to have found out last week that the Tories had borrowed almost £5 billion more than the Office for Budget Responsibility expected.

Housebuilder Barratt fell 6.56% on Tuesday, closely followed by Berkeley Group and Persimmon.

The FTSE 100 rose 17.68 points, or 0.21%, to end the day at 8345.46.

Dan Coatsworth, investment analyst at AJ Bell, said that while Labour has pro-housebuilding policies, investors “didn’t like the tone” of the speech.

“The Prime Minister’s tough talk on things getting worse before they get better might give some households the jitters and make them not want to get into more debt, such as taking on an expensive mortgage.

“That could have a negative impact on property market activity, hence why shares in housebuilders, property portals and kitchen companies were among the biggest fallers on the FTSE 100.”

In Europe, Frankfurt’s Dax index rose 0.44% while the Cac 40 in Paris closed down 0.32%.

In New York, a little while after markets had closed in Europe, the S&P 500 was trading down 0.03% while the Dow Jones was 0.23% lower.

On currency markets, the pound had gained 0.34% against the dollar at 1.3232 and had risen 0.33% against the euro at 1.1854.

In company news, distribution and outsourcing firm Bunzl increased its profit guidance for the year, with acquisitions set to boost sales.

The FTSE 100 business told shareholders it now expects adjusted operating profits for 2024 to “show a strong increase in comparison with 2023” after a recent improvement in profit margins.

It came as Bunzl reported that adjusted operating profit grew by 3.9% to £455.5 million over the first half of this year.

Bunzl shares rose 7.97 on Tuesday.

Brent crude oil futures were down 1.98% to 79.81 US dollars as markets were closing in London.

The biggest risers on the FTSE 100 were Bunzl, up 256p to 3470p, easyJet, up 30.9p to 478.8p, IAG, up 3.55p to 183.25p, Whitbread, up 50p to 2898p, and Antofagasta, up 32.5p to 1910.5p.

The biggest fallers on the FTSE 100 were Barratt Developments, down 36.2p to 515.6p, Berkeley Group, down 225p to 4980p, Persimmon, down 73.5p to 1632p, Scottish Mortgage Investment Trust, down 37p to 826.2p, and JD Sports, down 6.15p to 143.1p.