Housebuilders, banks and retailers the big Budget winners

Housebuilders, general retailers and banks were the big winners in the emergency Budget.

Banks rallied after the £2 billion levy on the sector came in significantly lower than the £3 billion cost that had been widely anticipated.

General retailers bucked the trend in the wider market, which is down 1.06% in late afternoon trading, rising sharply on the news that VAT will be increased to 20% next January.

Morrisons, Marks & Spencer, Next, Tesco and Home Retail Group were the standout performers in a sea of red.

Joshua Raymond, market strategist at City Index, said: ‘The retail sector surged 2% during the Budget speech to its session highs on news that the expected VAT rate hike will come into affect in January next year and will not impact most food goods, triggering rallies in Marks and Spencer and Morrisons share prices.

‘Whilst the VAT hike is likely to have an affect on the ability of consumers to spend cash, the hike to 20% is a little less severe than some of the more drastic numbers speculated and by delaying the hike to next year, it gives retailers and consumers and adjustment period to get their houses in order.’

Housebuilders rallied after the chancellor said that VAT will not be imposed on new housing. The rise in CGT to 28% with the threshold remaining at £10,000 also boosted the stocks, as it was significantly less than was feared.

Mark Goodwin, director of external affairs at the Royal Institution of Chartered Surveyors, said: ‘RICS welcomes the government's decision not to reduce capital spending beyond the cuts announced in the March budget. The construction industry is a powerful engine of growth, and we had emphasised in our emergency budget submission that any further cuts in capital spending would have undermined the tentative economic recovery.’

Barratt was up 4% with Redrow up over 3% and Persimmon gaining more than 2% and 3%.