The FTSE 100 slumped to a dismal new low as Rachel Reeves delivered her maiden Budget.
The Chancellor announced a hike in taxes by £40 billion as she promised to “fix the foundations” of the economy and repair the public finances.
The FTSE index at 1.30pm was down by 53.87 (0.66 percent) compared with the start of trading, having dipped sharply by 40.14 points first thing, before rallying.
In the first Labour Budget since 2010 – and the first ever delivered by a woman – Ms Reeves promised to “invest, invest, invest”.
But she said the “black hole” left by the Conservatives requires tens of billions of additional taxes.
Ms Reeves claimed the scale of the public spending problems she inherited were worse than previously thought.
She said the £22 billion “black hole” left by the Tories in this year’s finances showed they “hid the reality of their public spending plans”, with problems recurring in future years.
Ms Reeves also promised to set aside £11.8 billion to compensate those affected by the infected blood scandal and £1.8 billion to compensate victims of the Post Office Horizon scandal.
The Chancellor said: “Together, the black hole in our public finances this year, which recurs every year, the compensation payments which they did not fund and their failure to assess the scale of the challenges facing our public services means this Budget raises taxes by £40 billion.
“Any Chancellor standing here today would face this reality.
“And any responsible Chancellor would take action.”
Responding for the Conservatives, former Prime Minister and leader of the opposition Rishi Sunak was scathing in his criticism.
He said: “The truth has come out.
“On the day that he took office, the Prime Minister said that he wanted to restore trust to British politics with actions, not words.
“Well today, his actions speak for themselves with a Budget that contains broken promise after broken promise and reveals the simple truth that the Prime Minister and the Chancellor have not been straight with the British people.
“Time and again, time and again, we Conservatives warned Labour would tax, borrow and spend far beyond what they were telling the country. And time and again, they denied they had such plans.
“But today, the truth has come out, proof that they planned to do this all along, because today’s Budget sees the fiscal rules fiddled, borrowing increased by billions of pounds, inflation-busting handouts for the trade unions.”
