Investors are concerned about the UK's growing public deficits, movements in the markets suggest.
The markets gave Alistair Darling's Budget a thumbs-down this afternoon.
Speaking in parliament today, the chancellor of the exchequer announced a range of measures aimed at promoting recovery from the credit crunch, including hikes in income taxes and restrictions in pension tax relief for the rich, the extension of the existing suspension of stamp duty and a raising of the ISA savings limit from £7,200 a year to £10,200.
However, the FTSE 100 had dropped 0.5 percent by 14:20 BST, with stock investors seemingly showing little enthusiasm for the plans. The pound also weakened dramatically on the news, falling 1.6 percent against the dollar to $1.144.
These declines are also due to Mr Darling's announcement that public deficits would hit £175 billion in 2009 - and that Britain's net borrowing would top out at 79 percent of GDP over the years to come. These huge debts appear to have eroded confidence in the UK economy, explaining this afternoon's movements in the currencies markets in particular.
Joshua Raymond, market strategist at City Index commented: "The borrowing figures are massive… The markets' reaction demonstrates that the Budget has not calmed [investor] nerves."
Also reacting to the Budget, the Federation of Small Businesses (FSB) said that it "largely ignored the small businesses that are at the heart of job creation and economic recovery" and AEGON said that the pension tax relief decision could create "less engagement" among savers. However, the ISA limit increase was welcomed by savings account provider Halifax, which said it was "fully behind" the move.
