Key takeaways
- The FTSE 100 was trading roughly flat near 10,696 at 13:15 GMT on October 28, 2026, after opening lower, as bank gains offset weakness in GSK and Unilever.
- Chancellor John Healey said on October 28, 2026 that the UK bank surcharge will rise from 3% to 6% for 15 months from January, well below the 8% level markets had feared.
- Standard Chartered led the index after reporting third-quarter pretax profit of $2.25 billion, ahead of the $2.09 billion analyst consensus compiled by Bloomberg.
- The 10-year gilt yield stayed near 5.34% through the Budget, suggesting bond investors did not treat the statement as a shock.
The FTSE 100, the index of the 100 largest companies listed in London, recovered from an early dip on October 28, 2026 and traded close to flat after Chancellor John Healey delivered his first Budget. The reason was a relief rally in banks: Healey said the surcharge on bank profits will double to 6%, a smaller increase than the 8% that had been widely reported. At 13:15 GMT the index stood at 10,696.52, up 0.09%, according to a Proactive Investors market blog.
The session combined three separate catalysts: the Budget, a strong earnings beat from Standard Chartered, and caution ahead of interest rate decisions in the United States and Canada. Alliance News reported that the Federal Reserve and the Bank of Canada were both due to announce decisions the same day. For Canada, see Intelligence Report’s analysis of the Bank of Canada rate decision.
Why did the FTSE 100 barely move on Budget day?
The index opened lower, falling about 31 points to 10,655 after Tuesday’s close of 10,687, according to Proactive Investors. Healthcare and consumer staples weighed on it. Reuters reported that Unilever and GSK led the early declines after their quarterly results.
Banks provided the offset. Banking makes up close to a fifth of the index by weight, according to FXStreet and BBN Times analysis, so a sector re-pricing has an outsized effect on the benchmark. The big four lenders had fallen between 6% and 11% in October as fears of an 8% surcharge built, The Market Reporter said.
The prior session was weaker. The FTSE 100 closed on October 27 at 10,686.54, down 80.79 points or 0.8%, after HSBC reported third-quarter revenue of $18.62 billion against a $19.00 billion consensus, according to Alliance News and other market reports.
What does the doubled bank surcharge mean for UK lenders?
The bank surcharge is an extra tax on banking profits that sits on top of corporation tax. Reuters reported that Healey will lift it from 3% to 6%, partly reversing the cut from 8% made three years ago under then-Prime Minister Rishi Sunak. The change is temporary and will last 15 months, starting in January, according to City AM.
Healey told MPs that “global economic storms” meant he was asking banks to help fund relief for households, according to The Market Reporter. City AM said the proceeds will pay for the government’s energy support package.
The financial effect is modest relative to the earlier fears. Treasury figures cited by The Market Reporter show the existing 3% surcharge raised £1.2 billion in 2025-26, and each extra percentage point is estimated to raise a further £400 million a year. Barclays, NatWest and Lloyds shares rose about 4% after the announcement, per Proactive Investors and Reuters.
Exposure differs by lender. The surcharge applies to UK banking profits above £100 million, so domestic banks carry most of the risk: about 85% of Lloyds and NatWest group profits are eligible, against 33% at Barclays and 20% at HSBC, The Market Reporter said.
How did Standard Chartered lead the FTSE 100?
Standard Chartered, the London-listed bank that earns most of its income in Asia, was the top blue-chip performer. It reported third-quarter pretax profit of $2.25 billion, up 27% from a year earlier, against a Bloomberg-compiled consensus of $2.09 billion, according to ADVFN. It raised its 2026 income growth guidance above the previous 5% to 7% range and targets a return on tangible equity of around 14%, Proactive Investors reported.
Chief Executive Bill Winters said the breadth of the results supported the revised outlook, according to Investing.com. AskTraders noted the profit came after a $34 million charge tied to the Middle East conflict. The shares rose about 4% at the open, and Reuters-based market reports described the stock as the index’s strongest performer.
How did gilts and sterling react to the Budget?
Bond markets were calm. The UK 10-year gilt yield, which sets benchmark government borrowing costs, was at 5.34%, down 1.4 basis points on the day, InvestingLive reported. MoneyWeek recorded a brief dip to 5.31% as Healey started speaking, followed by a return to about 5.34% as he discussed fiscal headroom.
Headroom, the buffer against the government’s own fiscal rules, was the key number. InvestingLive said the Office for Budget Responsibility (OBR) projects £15 billion at the end of the forecast period, down from £23.6 billion in March but in line with a Reuters poll of economists. Healey also said debt interest will cost an extra £14 billion this year, according to the same report.
Sterling was quoted at $1.3288 at midday, below Tuesday’s London close of $1.3307, Alliance News reported. Energy costs are a recurring theme in the Budget; for a related policy debate, see Intelligence Report’s piece on Healey’s fuel carbon charge.
What to watch
- Closing level: whether the FTSE 100 holds above Tuesday’s close of 10,686.54 once the Federal Reserve decision lands.
- Bank shares: whether the 4% gains in Barclays, NatWest and Lloyds persist, and how analysts revise earnings for the 15-month surcharge from January.
- Gilt yields: the 10-year yield around 5.34% and the 30-year, where deVere Group’s Nigel Green said nerves are rawest.
- OBR scrutiny: economists’ reading of the £15 billion headroom and the 4.2% deficit forecast for this year.
- Oil and the Middle East: AskTraders linked higher oil prices to reports of possible renewed US action against Iran, a risk for UK inflation and the energy package.
Frequently asked questions
What happened to the FTSE 100 on October 28, 2026?
The FTSE 100 opened lower, around 10,655, then recovered to about 10,696 by 13:15 GMT, up 0.09%, as bank shares rallied after the Budget. Standard Chartered led gains after a profit beat, while GSK and Unilever weighed on the index.
What is the new UK bank surcharge?
Chancellor John Healey announced on October 28, 2026 that the surcharge on bank profits above £100 million will double from 3% to 6%. It starts in January and lasts 15 months, with proceeds funding energy bill support, according to Reuters and City AM.
Why did bank shares rise after a tax increase?
Investors had braced for a return of the surcharge to 8%, after reports earlier in October. The 6% temporary rise was smaller, so Barclays, NatWest and Lloyds shares rose about 4% on relief, according to Proactive Investors and The Market Reporter.
Sources
- Britain's finance minister hikes bank tax to 6%, less than lenders feared (Reuters via Yahoo)
- Budget 2026: Healey doubles bank tax to fund energy package (City AM)
- Bank shares jump 4% after Budget surcharge comes in below feared 8% (The Market Reporter)
- MARKETS LIVE: Wall Street futures mixed as AI earnings and Fed decision loom (Proactive Investors)
- Standard Chartered PLC 3rd Quarter Results (ADVFN, RNS)
- UK budget: Growth forecasts cut as Healey unveils £15 billion fiscal buffer (InvestingLive)
- FTSE 100 slips ahead of budget but banks rally (Alliance News via MarketScreener)
- London's FTSE 100 bogged down by GSK, Unilever; budget, Fed in focus (Reuters via AOL)
- FTSE 100 falls 0.8 percent as HSBC drags banks
- Autumn Budget live (MoneyWeek)
Top image: ChiemSeherin / Pixabay
This article was produced by the Intelligence Report Desk. Sources are linked below.
