FTSE 100 Index: Europe Sinks as Markets React to Reported Income Tax Reversal
Risk appetite evaporated across global markets on Friday, leaving Europe deep in the red at the opening bell.
The selloff, which first swept through Asia and then Wall Street, intensified as traders tried to decipher what the UK government will — and won’t — include in its late-November budget.
Rather than the widely anticipated move to raise basic and higher income tax rates, Chancellor Rachel Reeves is now expected to leave those rates untouched. Multiple reports suggest the Treasury is instead considering shifting the income thresholds at which taxpayers enter different brackets. That approach keeps headline rates the same while quietly pulling more earners into higher bands.
Bond traders reacted instantly. Gilt yields whipsawed as investors recalibrated their expectations for the UK’s fiscal roadmap. The benchmark 10-year yield pushed toward 4.57%, while the 2-year reached 3.82%, underscoring concerns that the government may struggle to close its budget gap if it abandons the simplest revenue lever.
Market strategists warned that uncertainty, not the tax structure itself, is doing the most damage. The risk, they argue, is that avoiding explicit rate increases forces the Treasury to search for smaller revenue-raising measures across multiple sectors — an approach that could weigh on growth while still failing to resolve the deficit.
The equity reaction was swift.
The FTSE 100 slumped around 1.65%, dragged down by a sharp retreat in financial names. Lloyds, NatWest and Barclays each lost about 4%, helping to set the tone for a broader European decline. In Germany, the DAX slipped 1.38%, France’s CAC 40 moved 1.31% lower, and the STOXX 600 weakened 1.52% as selling pressure spread across the region.
Despite the sour mood in equities, the British pound managed a cautious rise, trading just under $1.32 against the dollar — a sign that currency markets are weighing the possibility of stronger UK household spending if direct tax rates ultimately remain unchanged.
For now, investors are waiting not for the November budget itself, but for clarity. With global markets already on edge, even small shifts in fiscal plans are proving enough to rattle sentiment.
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Alex is Editor-in-Chief of Coindoo and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
