- FTSE falls 29 points to 9,187
- Bank shares fall as thinktank proposed windfall tax
- Banks say it's not a good idea
- Others say it could be a popular policy
4.44pm: FTSE 100 slips
The FTSE 100 moved lower on Friday afternoon as European and US inflation readings saw investors secure profits, closing down 29 points at 9,187.
“European stock indices retreated on the last day of the week as profit taking kicked in ahead of the weekend,” IG senior technical analyst Axel Rudolph said.
“German inflation rising more-than-expected to a 5-month high pushed the DAX 40 lower, ditto for the ES35 as Spanish inflation stayed at a 5-month high too. The French CAC 40 remained in negative territory despite inflation slowing to 0.9% in August, overshadowed by the country's political turmoil."
4.18pm: FTSE down over 100 points this week
Backtracking has been the theme for the FTSE 100 this week and today was no different, with the index on course to lose over 110 points this week.
Banks were the main cause today, after a proposal by the IPPR thinktank to impose a windfall tax on the sector to help fill the black hole in the UK's public finances.
The UK-focused trio of NatWest, Lloyds and Barclays saw the worst of losses trimmed though, currently down 4.3$, 3.1% and 2.2%.
Retailers JD Sports Fashion, Kingfisher, bookmaker Entain, and travel companies Whitbread and IAG are amonog other fallers, along with housebuilders Barratt Redrow and Persimmon.
The earlier decline for the pound against the dollar has been erased, while gilt yields have risen across the board.
As the weather turns more autumnal, the focus is shifting towards the UK budget, which should come at the end of October/start of November.
Government leaks to fill an expected £30 billion-plus black hole have also included increases in capital gains tax, property tax rises and national insurance hikes on rental income, as well as the proposal for a levy on banks.
"The impact of this drip feed of potential tax rises is eroding confidence and dimming the prospects for the UK economy. It is also starting to impact UK asset prices," says Kathleen Brooks at XTB.
3.15pm: JTC says it has rejected two Permira offers
The JTC PLC (LSE:JTC) board has confirmed that the non-binding cash takeover bid put forward by Permira last Friday, was the second it has received from the UK private equity firm.
Directors of the FTSE 250 listed fund administration and corporate services provider rejected this second offer earlier this week, having done the same with an earlier proposal last Wednesday, 20 August.
"Shareholders are advised to take no action at this time in relation to the Permira possible offer," JTC said.
2.46pm: Wall Street on the slide
Downwards is the opening move on Wall Street, with the Nasdaq setting the pace with a 0.8% slide.
The S&P 500 has dropped back 0.4% from its record high above 6,500, while the Dow Jones is down 0.1%.
Biggest fallers on the S&P are Dell Technologies, down 10%, followed by Super Micro Computer down 4% and Caterpillar, down 2.7%, and Ulta Beauty, down 3.2%.
Dell reported second fiscal quarter results afterhours, beating Wall Street expectations for sales and revenue but disappointing on the outlook.
Super Micro cautioned in an SEC filing material weaknesses in financial reporting controls.
Caterpillar warned that tariffs will have a bigger impact on its financial results this year.
1.40pm: US inflation in line with ests
Today's important macroeconomic number is the US PCE price index, the measure that the Federal Reserve uses as its main inflation target.
The data printed at a 0.2% monthly gain for July, softer than the 0.3% the previous month, as expected.
Core PCE prices, which strip out food and energy, rose 0.3% on the month, again in line with forecasts.
1.31pm: Windfall tax is 'unlikely'
The bank windfall tax is unlikely to see the light of day, says banking analyst Tomasz Noetzel at Bloomberg Intelligence.
Lloyds, NatWest, Barclays UK and HSBC UK would face an almost £10 billion charge over two years if the annual levy proposed by the IPPR is introduced.
"This equates to 18%-20% of those banks' combined consensus 2026-27 pretax profit," he says.
"That said, we believe the proposal is unlikely to be enacted, as any government measures to ease public finances would need to consider growth implications."
NatWest shares are down 5.7% as investors do not seem to be of the same mind, with Lloyds now down 4.7% and Barclays 4%, with HSBC just under 1%.
12.50pm: FTSE losses trimmed as pound slides
The Footsie has seen some of its losses trimmed as the clock ticks into the afternoon.
Banks are still down, joined by other financial sector names too, but others have gained to slightly offset those declines.
A 0.4% fall in the pound has boosted some, perhaps. A lot of traders are pointing to gilt yields rising.
Rentokil, Rolls-Royce, Prudential, ConvaTec, Babcock and British American Tobacco are top of the table.
Across the Atlantic, US futures appear firmly in the red, led by the tech-heavy Nasdaq's 0.55% slide.
Futures for the Dow Jones and S&P 500 are both down 0.3%.
*UK 5-, 30-YEAR YIELD GAP WIDENS 2BPS TO 149BPS, MOST SINCE 2017
— Michael Brown (@MrMBrown) August 29, 2025
12.02pm: JTC bid
Private equity group Permira has confirmed that it has proposed a bid for JTC PLC (LSE:JTC), the provider of fund administration and corporate services.
The London-based firm said it was making the news public after speculation in the media.
Confirming that it approached the JTC board, Permira said a possible cash offer had been mooted, though there was no certainty that it would turn into a firm one.
Its deadline to put-up-or-shut-up is 5pm on 26 September.
11.58am: Alternative to bank windfall tax
An alternative to a bank windfall tax would be for the Bank of England to absorb some of its own losses, as the US Fed and ECB already do, says the New Economics Foundation.
The BoE has cost the Treasury £80 billion since 2022 and is likely to cost around £20 billion a year going forward, it adds.
These transfers from HM Treasury to the BoE limit the Chancellor’s ability to meet her self-imposed fiscal rules.
There is a clear alternative: the Bank of England could absorb some of its own losses, as the US Fed and ECB already do, or the government could adopt a windfall tax as @ippr.org has suggested today. Here's our thoughts???? neweconomics.org/2025/02/the-...
— New Economics Foundation (@neweconomics.bsky.social) August 29, 2025 at 12:13 PM
"To reverse austerity in public services and invest in vital public infrastructure, changing our approach is vital," the charity said earlier this year.
International examples show how better management of the central bank balance sheets "could unlock over £130 billion by 2030".
Under quantitative easing (QE), central banks bought government bonds at very low interest rates to stimulate the economy, buying them with newly-created reserves.
As the BoE base rate rose from near zero in 2020 to above 5% by 2023, the central bank is incurring a loss as the current interest rate is higher than the interest received on the bonds it bought.
Losses for the BoE have been increased further by active quantitative tightening (QT), as the bonds are sold back to the market rather than letting them mature, with an indemnity agreement between the Treasury and the Bank agreed by George Osbourne back in 2012 meaning that these losses directly put pressure on tax and borrowing levels.
When QE was profitable it allowed the Treasury to receive over £120 billion from the Bank between 2012 and 2022, of which £70 billion has been reversed in the past two years as losses were charged to the Treasury.
"Fortunately, these costs are not inevitable," the NEF says, with reforms such as tiering reserves, slowing QT and changing the indemnity that could reduce the costs, and are already implemented in other countries.
“To reverse austerity in public services and invest in vital public infrastructure, changing our approach is vital.”
The US Fed has noted that its losses “do not affect [its] ability to conduct monetary policy or meet its financial obligations.”
Therefore, the NEF says UK "should question why the Bank cannot absorb more of these costs", and "could unlock billions of public spending, avoid needless austerity while creating a fairer monetary system".
11.39am: Banks respond
The banking sector, represented by the UK Finance lobbying body, has unsurprisingly come out against the windfall tax.
"The banking sector is very important to UK tax revenues, making a total tax contribution of almost £45 billion last year," a spokesperson says.
"Banks based here already pay both a corporation tax surcharge and a bank levy.
"Adding another tax would make the UK less internationally competitive and run counter to the government’s aim of supporting the financial services sector to help drive growth and investment in the wider economy."
Strangely, many market analysts and commentators are talking about rumours about a bank tax and it being a "Labour proposal", ignoring that the proposal has come from an independent (though progressive, left-leaning) think tank.
The FT splashed with a story about big business bosses warning against more taxes -- quoting anonymous senior City figures -- while there was a similar angle from Asda boss Allan Leighton in the Mail, focused more outside the banking sector.
Some leftfield tax suggestions have been proposed by David Belle of Fink Money, which might give Rachel Reeves and Kier Starmer palpitations, but would provide weeks of content for Proactive Investors and other financial pages.
These include Noel Edmonds hosting an inheritance tax wheel of fortune "showdown" at the O2 arena on daytime TV, with all estates over £1 million having to spin a wheel where options include '97% to the Treasury' sitting next to 'tax-free' and 'Lose the lot to fund HS2'.
Trader cage matches. Want to short sterling? Then fight for it. "Traders must fight each other gladiator-style on live TV for market-making privileges. All proceeds from ticket sales and advertising deals go straight into the national pension pot."
"Replace the term 'tax' with “something more fun," is another suggestion, in a public services lottery bonanza. "People might then be more palatable to the idea. Then you get more revenue for the govt."
Other ideas include a House of Lords lock-in: where welfare spending is solved by "ring of fire", and a risque proposal for how to better use the poles in TfL underground trains.
Belle clearly thinks the bank tax does not go far enough, right?
10.49am: Public may back bank windfall tax
The FTSE 100 is down 33 points at 9,184 now.
Bank shares have fallen further, with NatWest down 4.75%, Lloyds 4.6% lower and Barclays off by 3.8%.
This is on the back of a windfall tax proposal from thinktank IPPR.
"It’s hardly a surprise that every cushion is being upended in the hunt for extra cash to fill the much-discussed black hole in the Treasury’s finances," says Russ Mould, head of investment at AJ Bell.
"The issue is whether taxing the banks more will end up stifling the very growth the government is keen to foster, by crimping lending to businesses and households alike."
He says banks will undoubtedly make this argument, as they usually do, and shareholders are not likely to want to see such a tax raid either.
"The wider public may see it differently, given how HSBC, Barclays, NatWest and Lloyds are expected to earn some £44 billion between them worldwide in 2025, their third-best year ever, after 2023 and 2024."
Aggregate dividend payments and share buybacks of almost £28 billion are forecast for 2025 from these four lenders, which could make them a "soft political target", says Mould.
"But Chancellor Rachel Reeves may be wary of doing something that could put off investors and shareholders as she seeks to earn favour from the markets and attract investment."
10.21am: Buyer's market in UK housing
Another monthly uptick in property sales (see previous update) "shows that buyer demand remains steady and sellers are willing to adapt to price sensitivity by adjusting their expectations to close deals", says Jonathan Handford, managing director at estate agent Fine & Country.
While there have been some reductions in mortgage rates in recent months, "conditions remain fluid" he acknowledges, and further declines from lenders are not guaranteed.
The amount of housing stock coming through remains "healthy" across most parts of the UK, Handford says, giving buyers the opportunity to shop.
"We may see a ‘wait-and-see’ trend emerge among sellers who are uncertain about potential property tax changes in the autumn budget.
"However, this could also spur activity, particularly in the prime market, as sellers of high-value homes become more flexible on their asking price."
10.02am: Property data
UK property transactions increased in July, according to HMRC data, with residential activity rising both year-on-year and month-on-month, according to provisional government data.
Seasonally adjusted residential transactions reached 95,580, up 4% on July 2024 and 1% higher than June 2025. On a non-seasonally adjusted basis, residential transactions rose 5% month-on-month to 101,070, also up 4% year-on-year.
Non-residential transactions showed mixed trends. The seasonally adjusted figure of 10,260 was 1% higher than in July 2024 but 1% lower than June 2025. On a non-seasonally adjusted basis, non-residential transactions edged higher year-on-year and rose 4% month-on-month to 10,620.
The data highlight stronger activity in the residential market in July compared with both the previous month and a year earlier, while non-residential activity was broadly stable.
9.47am: Not all businesses plan to raise prices
Some fresh data from the Office for National Statistics, which this morning is its 'experimental' numbers on economy activity and social change created using rapid response surveys and novel data sources.
When businesses were asked how they plan to adapt to future increases in employment costs, 28% said that they would increase prices, 23% would absorb the cost within profit margins, 10% would reduce the number of employees and 10% would reduce spending on investment. This is from the ONS's Business Insights and Conditions Survey.
Job ads were down 1% last month, according to Textkernel data, both compared with June and when compared with July last year.
The system average price of gas increased by 3% last week, with a 1% increased in electricity, according to data from the National Gas Transmission and Elexon.
Weekly figures show the number of ship visits to UK ports last week was down 12% on last year, according to data from vessel tracking specialist exactEarth.
UK flights in the same week were up 2% with 2024, according to aviation organisation EUROCONTROL.
9.19am: FTSE back below 9,200
The FTSE 100 is down 29 points to below to 9,188, the first time it has been below 9,200 since last Wednesday.
Banks are weighing, as noted below.
"The drip feed of potential tax rises to be included in this budget have dominated the papers this month," says market analyst Kathleen Brooks at XTB.
Based on the IPPR proposal, she says if Rachel Reeves goes after the FTSE 100’s big hitters like banks, "this could weigh on the index as we lead up to the Autumn budget".
With today being the last trading day of the month, Brooks is among those looking back at trends seen in August.
US stocks outperformed European peers, is one of them, with the S&P 500 rising by 2% compared to a 0.8% gain for the FTSE 100.
"This gap could widen, especially if we get the expected interest rate cuts from the Federal Reserve this year, at the same time as the UK government seems focused on squeezing businesses and consumers with multiple tax increases later this year, which is eroding confidence and dimming UK growth prospects further," says Brooks, who I see has retweeted Kemi Badenoch posts on X as recently as last week.
Brooks says "political woes" are also weighing on the US dollar, which is the second weakest performer in the G10 this month, while the pound is one of the top performers despite being one of the worst this past week.
"The dollar has been undermined by the sharp drop in Treasury yields in recent weeks, and the heating up in the spat between Donald Trump and Federal Reserve member Lisa Cook is not helping sentiment towards the dollar... Any development in the Cook/ Trump law case in the coming days could have big ramifications for the US dollar, and it worth watching this story closely."
In this environment, she says is "no wonder" that gold has climbed back above $3,400 per ounce in recent days, though if the price of the yellow metal has slipped a little below that mark this morning.
8.36am: Bank levy inspired by Margaret Thatcher’s approach in 1980s
On the bank windfall tax, IPPR associate economic director Carsten Jung says: "The Bank of England and Treasury bungled the implementation of quantitative easing.
"What started as a programme to boost the economy is now a massive drain on taxpayer money.
"Public money is flowing straight into commercial banks’ coffers because of a flawed policy design."
He contrasts families struggle with rising costs while the government "is effectively writing multi-billion-pound cheques to bank shareholders" - something that many shareholders in Lloyds, NatWest and Barclays probably celebrate.
"This is not how QE was meant to work – and no other major economy does it this way," says Jung.
"A targeted levy, inspired by Margaret Thatcher’s own approach in the 1980s, would recoup some these windfalls and put the money to far better use – helping people and the economy, not just bank balance sheets."
8.15am: Banks lead FTSE 100 lower at open
The FTSE 100 has dropped slightly at the open, down 5 points to 9,212 - not even bothering to entertain the farce of following the modest gain that futures were indicating.
Banks are leading the fall, with NatWest down 3.7%, followed by Lloyds and Barclays, both down over 2%, and HSBC down 0.8%.
It comes as a 'Margaret Thatcher-style' tax on bank windfalls has been proposed by the Institute for Public Policy Research (IPPR), which says a tax on commercial banks is needed to "address the unintended consequences of quantitative easing".
The UK taxpayer is spending £22 billion a year compensating the Bank of England for losses on its QE programme, they say.
7.58am: Bottle deposit scheme news
A British bottle deposit return scheme (DRS) has been in the pipeline for years, and this week has seen a "reason to be cheerful", says Clive Black, the retail sector guru at Shore Capital.
Scotland came close to launching a DRS scheme a few years ago, but pulled the plug.
Now the Deposit Management Organisation (DMO), covering England, Scotland and Black's own Northern Ireland has appointed a new chair, in the form of John Bason.
Black calls this a "world-class appointment, a bright, experienced, distinguished, and energetic businessman of considerable talent", having been finance chief at Associated British Foods for nearly a quarter of a century, a non-exec at Compass Group and chair of Fareshare, the food distribution charity.
The new DRS scheme is due to come into operation in October 2027, which Black says, "gives some time for proper planning, drawing we sense, from the considerable learning from the aborted Scottish programme".
"As such, whilst we do not understate the scope for another Whitehall farce, we can think of few, if any, better equipped people to seek to work through the morass of officialdom than Mr Bason, who will despite his considerable talents still need good fortune."
7.44am: Wood Group agrees sale
While the board of John Wood Group PLC (LSE:WG.) is engaged in talks with Dubai's Sidara about taking over the core business, it is also carrying out a programme of non-core disposals.
Today it says a deal has been struck to sell its North America transmission and distribution business to US power company Qualus for $110 million (£81.5m) cash.
The sale follows a competitive auction process, valuing the business at 14.9x adjusted EBITDA.
Sidara's current put-up-or-shut-up deadline (pushed back again yesterday) is 5pm today.
7.27am: Whats Cook-ing?
Yesterday, in case you missed it, Federal Reserve governor Lisa Cook sued President Trump to block his move to oust her.
The lawsuit also requested the courts to issue an injunction that would allow Cook to remain in her post as governor while litigation is ongoing.
"For now at least, it doesn’t appear that markets are pricing in much chance of Cook being forced out," says Henry Allen at Deusche Bank.
He says Polymarket data suggests there’s a 79% chance that Cook will still be voting at the next FOMC meeting in mid-September.
"And earlier this week, when Trump published his letter removing her, long-end Treasury yields were pretty unreactive in the circumstances."
Yesterday saw a flattening in the Treasury yield curve, Allen notes, which unwound some of the moves from earlier this week as concern grew about the Fed’s independence.
7.16am: FTSE 100 predicted to open higher
The FTSE 100 is predicted to open higher again on Friday, but this has been the call on futures markets the past two days but the index has lost a combined 48 points.
Nevertheless, as things stand ahead of the opening bell, futures for London's blue-chip benchmark are up 8 points from where we finished yesterday at 9,216.8.
Wall Street closed higher overnight, led by the Nasdaq's 0.5% rise despite a fall for Nvidia, with the S&P 500 adding 0.3% to climb above 6,500 for the first time and the Dow Jones up 0.2%.
In Asia, Chinese equities have continued to advance, with the CSI 300 up 0.6% and nearing its highest closing level since July 2022, while Japan’s Nikkei and South Korea’s Kospi are both down 0.2%.
Later today, markets will be fixated on US PCE inflation data, which is closely watched by the Federal Reserve.