The long-awaited Budget day has come, so the UK will get a clearer idea on how the government plans to usher the economy out of the pandemic.
It’s a dilemma for Rishi Sunak, who is hamstrung by PM Boris Johnson’s promises in the election of 2019 not to increase income tax, national insurance or VAT.
However, it is understood he’s looking to hike corporation tax from 19p in the pound to 25p over the course of the parliament, though it would not breach the Tory manifesto pledge.
An increase to 22p alone would add GBP10bn to the government’s pockets, while Berenberg said a 1-2% hike would not have any major negative economic consequences.
Housebuilders are expected to be among the winners as the Chancellor is looking to encourage first-home buyers, while the retail, hospitality and leisure sectors will benefit from the extension of business rates holiday and the temporary VAT cut, among other measures to push people to spend their disposable income.
Government news aside, it will be a busy day for corporate news, with the UK services PMI also on the schedule.
Housebuilders still on the spot
Its competitor said on Tuesday it set aside GBP125mln to cover fire safety repairs to apartment blocks, in the wake of new recommendations following the Grenfell Tower inquiry, so investors may be expecting a similar move from Persimmon.
Shares may also be lifted by budget news on the revamped Help to Buy scheme and the Stamp Duty Holiday extension, which buoyed purchases during the pandemic.
Looking at present trading, sales rate be normalising by now after the second half of the year benefited from pent-up demand.
Persimmon has also already disclosed revenue and year-end net cash of GBP3.1bn and GBP1.2bn respectively, with management indicating profit before tax could come in at GBP850mln. UBS sees potential for a 235p dividend.
Prudential to update on demerger plans
Having already divested its UK business, the demerger was confirmed in January to “significantly accelerate” the focus on growth in Asia and Africa.
The insurer also said it was mulling over a capital raise of US$2.5bn-3bn to support business ventures in Asia, so investors will be keen to hear more on that.
DS Smith unpacks trading update
Packaging group DS Smith PLC (LON:SMDS) will deliver a trading update, with most investors likely to focus on the company’s pricing as the re-emergence of lockdown could ha reapplied pressure following an improvement in trends in its second quarter.
Pricing pressure could in turn weigh on revenues, making the outlook statement the most important factor as well as any update son the firm’s e-commerce, consumer and food clients which have held up best during the pandemic period.
Significant announcements expected for Wednesday March 3:
Finals: Prudential PLC (LON:PRU), Persimmon PLC (LON:PSN), Polymetal International PLC (LON:POLY), PageGroup PLC (LON:PAGE), Nichols PLC (LON:NICL), Getbusy PLC (LON:GETB), Avast PLC (LON:AVST), Allergy Therapeutics PLC (LON:AGY), Dialog Semiconductor Plc (LON:DLGD), Hiscox Ltd (LON:HSX), Vivo Energy PLC (LON:VVO)
Economic data: UK services PMI, UK OBR forecasts, US services PMI