Shares fall after U.K. mini-Budget

Press, 26 November 1980, Page 9

Shares fall after U.K. mini-Budget

NZPA-Reuter London.l sterling fell and oil fhares tumbled after the Britisli Government cut the, mini imum lending rate aid an< nounced a new tax ivy on North Sea oil production. I Sir Geoffrey Howe Chan-f cellor of the Exchequer yes-t terday announced i 2 peA cent cut in the hinimurrt lending rate to 14foer cenft and; said that th* Govemic meat intended to iritroduce ai new tax on North Sea oif production, possibfr as mucHt as per cent, fj ■ & Irf New York, ®ws of this North Sea plan tent stoclK prices of many/ companies operating there ft to a steefie divd-The Dow Jones avenc age! of 30 industrial stocksp which had dropped as muem as-14 points, eided trading at 878.75, down’ 11.18 fronf Friday’s close. 1 p On the New/ York StocMl Exchange the jverage pried per share fell 21c. il Sterling fell! 2c in New York to 5U51.3390 and ir|

London it ended the day 0.6 c (down-at SU e 2.341. ! Gold prices in New York propped to SUS6IB an (ounce, down SUSI 9 from •Friday’s close. VThe squeeze announced in ondon te aimed .at reducing State borrowing next year, nd follows admissions Dy Ministers that ftheir economic strategy- was (temporarily off course beIcause of a deeper-than-ex-Me’cted recession. I Sir Geoffrey admitted that (both Government borrowing and the growth in money supply would.be greater this wear than expected. f To get ; the Government strategy back- on course. Sir Geoffrey announced cuts totalling more (than S2.4billion in public spending next year. 14 This is the fifth time the (Conservative Government Jhas cut public spending dance it took office in May Hist year. U Sir Geoffrey said the cuts include $4BO million

less to be epent on defence. Defence spending. Sir Geoffrey said, would grow by 2.5 per cent in real terms both this year and next year. The other spending cute are likely to fall on housing, education; and local services. Sir Geoffrey said that Government grants to local authorities would ahs.o be cut. This will mean further cuts in services for increases in local taxes. ■ \ The measures include a new tax on Britain’s North Sea oilfields, which one company criticised as shortsighted and discouraging further exploration, and an increase in the Social Security contributions made by workers towards pensions, sickness, and unemployment benefit, and the National Health Service, One bright feature was a drop from 16 to 14 per cent in the Bank of England minimum lending rate which immediately led to similar falls in overdraft charges. Sterling’s fall, page 27.