UK markets took the Autumn Budget in their stride, with the FTSE 100 edging up and gilts rallying as investors welcomed signs of stability. Overall, markets reacted with relief rather than panic, reinforcing the value of staying diversified.
The dust has settled on the 2025 Autumn Budget, and the reaction from UK markets can be summed up as “sounds okay, I guess.”
The FTSE 100 closed at 9,691.58 points on Wednesday (26 November) This represented a gain of 82.05 points; a nice uplift, but pretty ordinary stuff.
Here’s how things played out on the day and what it all means for long-term investors like you.
What happened after the Budget
- Right after the official Budget announcement, the FTSE 100 dipped slightly, but by the afternoon it had bounced back to close with a gain.1
- At the same time, UK government bonds (gilts) rallied and yields fell, a possible signal that investors think fiscal pressure could ease, and possibly pave the way for future interest-rate cuts.2
- Sterling also firmed up slightly after the Budget, helping companies on the FTSE 100 with global earnings prospects.2
In short: despite some heavy-hitting tax headlines, markets seem cautiously optimistic over a Budget that offered some stability and helped calm nerves.
Why did it not affect things much?
Many FTSE 100 companies earn a large portion of their revenue overseas. That gives them insulation from domestic tax changes and makes a globally-oriented index like the FTSE 100 more attractive now than UK-focused equities.
The Budget’s revealed fiscal headroom (this is the buffer against future borrowing) came in better than expected, which eased concerns over default or fiscal panic, helping both bond and equity markets breathe easier.
For investors, this is a reminder of why diversified exposure to larger companies is often more resilient when tax and political volatility hit, especially if a good portion of profits come from outside the UK.
Final thought: The market reaction to the 2025 Autumn Budget shows something important.
Even when headlines are flying around, a combination of global exposure and resilient business models can help carry companies – and more importantly you – through turbulence. To the point where you may barely notice anything at all.
And that’s the benefit of globally diversified investing; you can ignore the noise, sit back, and just focus on your long-term plan.
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Important to know: When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than your original investment.
1Tax treatment depends on individual circumstances and may be subject to change in the future.