UK CFD traders are bracing for a difficult Autumn Budget this Wednesday, with a new survey suggesting confidence has deteriorated sharply amid fears of rising taxes, weaker markets and shrinking ISA allowances. According to CFD broker CMC Markets, which surveyed more than 300 of its UK CMC Invest clients, almost two thirds believe the upcoming Budget will be bad for the UK economy if predictions prove accurate, and an even greater number expect it to be bad for them personally.
The findings point to an overwhelmingly bearish mood. Around 68 percent of respondents say the Chancellor’s expected measures will be bad for me, while 61 percent think the broader economy will suffer as a result. More than half, at 53 percent, believe the Budget will make trading in the UK less profitable. This reflects worries about tax changes, market volatility and the potential impact on the competitiveness of UK markets.
Concerns about the future of stocks and shares ISAs appear to be driving much of the anxiety. A vast majority, 82 percent, are worried about potential changes to ISA rules, particularly the prospect of cuts to the cash ISA allowance. Traders fear that any reduction could push savers into riskier assets or discourage long term investing at a time when markets are already fragile.
Currency risk is also high on the agenda. Almost seven in ten respondents expect the pound to weaken following the Budget, which suggests traders see fiscal tightening and slower economic growth as likely outcomes. Many have already begun adjusting their positions in advance of the announcement.
Laurence Booth, Global Head of Capital Markets at CMC Markets, said the survey reveals a clear shift in trader behaviour and expectations.
“In the lead up to the Budget, our clients have told us that they are primarily concerned about it making trading less profitable in the UK. Nearly seven in ten traders believe the Budget will be bad for them, with over three fifths predicting it will also be bad for the UK economy.”
Booth added that even small policy changes could create meaningful moves across gilts, the FTSE and the pound.
“Suggested cuts to the cash ISA allowance are another clear pressure point, with more than four fifths expressing concern. It could force many savers to take risks they might normally avoid.”
He also noted rising interest in tax-efficient trading structures, including CMC’s newly launched non leveraged spread bet product, CMC Spectre, which offers professional clients a way to trade without leverage, daily financing costs or capital gains tax.
Sentiment heading into the Budget is firmly bearish, and many expect Wednesday’s announcement to reinforce, rather than relieve, the pressure.
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