Autumn Budget 2026: how UK stocks reacted

From the perspective of many companies affected by Chancellor John Healey’s maiden Budget, it appears very much a case of “it could have been worse”. It’s why we’ve seen relief rallies among UK-focused banks and gambling stocks in particular.

The chancellor told lenders he was grateful for the role they play but said they were needed to help give “breathing space to British families”. It’s why there’ll be a temporary increase in the Bank Corporation Tax Surcharge from 3% to 6% for 15 months from 1 January 2027.

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Analysts at Shore Capital calculate the higher surcharge will raise about £1.2 billion for the Exchequer. The government will use the money to support households with the rising cost of energy.

“Overall, we think the banks have escaped relatively lightly,” said research analyst Gary Greenwood, “particularly compared with some of the more punitive measures discussed ahead of the Budget.”

Shore Capital estimates that the new measures will reduce attributable earnings in 2027 by about 4% for Lloyds Banking Group (LSE:LLOY) and NatWest Group (LSE:NWG), but just 1% for Barclays (LSE:BARC) and HSBC Holdings (LSE:HSBA). That’s modest compared to estimates ahead of today’s event, with some speculating about direct taxation of interest that banks receive on central bank reserves.

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Shares in the major lenders had been up as much as 3-4% as the news broke, although gains have moderated since. 

These significant share price moves had an obvious effect on the FTSE 100 index.

It had already spent the half-hour prior to the chancellor’s speech erasing a 30-point loss racked up during the morning session. But there was more to come. When Healey stood up at 12:33 the index was little changed on the day at 10,689. By the time he sat down it was 23 points higher at 10,712.

Entain (LSE:ENT) chipped in too, with shares in the owner of high street bookies Ladbrokes and Coral up over 7% at one point. FTSE 250-listed Rank Group (The) (LSE:RNK), the UK’s largest casino operator, built on a strong morning session to trade up 11% mid-afternoon.

Like the banks, it was a sense of relief at the scale of measures announced.

The chancellor will increase the rate of Machine Games Duty from 20% to 25% on higher-risk slot machines with stakes over £1 from April 2027. To protect pubs and seaside arcades, Healey said he’s maintaining the existing rate for lower-stake machines. Industry operators and City analysts had feared a rise to as much as 40%.

Money raised will help pay for the freeze in business rates in the retail, hospitality and leisure industry, which is a big boost for Premier Inn owner Whitbread (LSE:WTB). The move, which will last for two years from April 2027, could save about £30 million/£60 million on Morgan Stanley’s original full-year forecasts for 2028 and 2029. That’s equal to a 7% and 12% boost to earnings per share.

Whitbread shares are currently leading the FTSE 100 risers, trading up almost 5% at an eight-month high, extending gains in the past month to 15%.

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• FTSE 100 ex-dividend dates: November 2026

Elsewhere, there were modest gains among housebuilders when the chancellor mentioned the recently announced Your First Home scheme. He confirmed that the £4.7 billion scheme would help “around 70,000 households in England to take their first step on to the housing ladder and support the delivery of an estimated 20,000 new homes”.

The scheme will open for pre-registration by the end of December and full applications from February 2027 with the first loans issued from next April.

However, share prices quickly tumbled, unwinding a chunk of the large gains recorded over the past few weeks. Taylor Wimpey (LSE:TW.), Persimmon (LSE:PSN) and Barratt Redrow (LSE:BTRW) are all down 7% or more.

Analysts at Morgan Stanley say, “the devil is in the detail”. When you sift through the numbers, you find that median local new-build house prices are above the scheme price caps, raising questions about how many homes will actually qualify.

They point out that Your First Home is smaller than Help to Buy at its peak in 2018/19, and that elevated mortgage rates will clearly offset some of the benefits of the previously announced 2.5% minimum deposit and 20% government equity loan.

“The scheme will not generate its first property sales until April 2027. It does little to address the immediate 2026 trading environment, and there remains a risk of buyers deferring purchases ahead of launch,” warns Morgan Stanley. “We await further detail, particularly the full local-authority price caps, to better assess the scheme’s eligibility, take-up and potential earnings benefit for housebuilders.”

In the meantime, only Persimmon is rated ‘overweight’ by the broker given its affordability as a new build developer with exposure to first-time buyers.   

It was similar in the green energy sector where mention of funding for hydrogen projects gave Ceres Power Holdings (LSE:CWR) and ITM Power (LSE:ITM) a brief boost. But that energy was short-lived, and the shares are currently down 5% and 2% respectively.