Comment: Darling puts on the kid gloves

FINANCIAL markets don’t like shocks and given the seismic hits that they have taken in recent months, the Chancellor made sure today’s pre-Budget report did not send the UK’s already quivering stock markets into meltdown.

In fact the FTSE 100 Index of leading shares – after an initial wobble when Alistair Darling got to his feet – closed up at 4130 points by the time he had sat down 55 minutes later and ended the day having risen 9.84% or 372 points to 4153, the biggest single one day rise in its history.

Given that some of the Chancellor’s previous announcements have rocked markets like a Ricky Hatton left hook, he was careful today to act with kid gloves.

His key measures in the pre-budget report had already been well briefed over the weekend such as the 2.5% drop in VAT and the 5% tax hike for those earning over £150,000 a year.

So no surprises was just what the jittery City needed.

Quite whether the equally unsteady economy will respond in such a positive way remains to be seen over coming months remains to be seen.

Mr Darling’s positivity failed to put too much of a glow on a decidely chilly outlook.

For the economic horizon to brighten, consumers will have to quickly feel the benefit of his warming up spending by cutting VAT by 2.5% and by businesses seeing the benefits of more lending from the banks.

The first he has done something about, the second he hopes he can influence, but as yet, has not succeeded.

Markets might be feeling better about things, but whether consumers and businesses will be able to beat the blues is the big question.