The FTSE 100 lagged behind European markets on Wednesday, which soared after Germany paved the way for a historic increase in defence and infrastructure spending.
London’s blue-chip index fell three points to finish the day at 8,755, a drop of less than 0.1%.
But European markets surged after Germany said it would change its fiscal rules to unlock hundreds of billions of euros to spend on defence and infrastructure projects.
The rise in shares was led by German industrial and defence firms, with the country’s Dax stock index soaring 3.6% and France’s Cac 40 rising 1.6%.
Frederique Carrier, head of investment strategy at RBC Wealth Management, said the German spending plans are “seismic and the country appears to be willing to implement structural changes which it has resisted for a generation”.
She added: “If passed, these measures would very likely benefit the German economy as past fiscal rectitude has restricted much needed infrastructure investments.”
Sterling was up 0.6% against the dollar at1.2866, while it was roughly 0.9% down against the euro at 1.1939.
Stateside, the S&P 500 was roughly level while the Dow Jones was up 0.3% as UK markets closed.
In company news, outsourcing giant Capita said it is “moving at pace” with a ramped-up cost-cutting plan as it swung back to an annual profit.
The group’s action to slash costs helped it post a £116.6 million pre-tax profit in 2024, against losses of more than £100 million the previous year.
Capita, a major contractor for the Government and local authorities which also manages the licence fee for the BBC and runs recruitment for the British Army, said it has been accelerating the use of AI to speed up certain tasks.
Shares soared 8.1% on Wednesday.
The biggest risers on the FTSE 100 were Antofagasta, up 110.5p to 1820.5p, Fresnillo, up 48.5p to 828.5p, Melrose Industries, up 38p to 680p, ConvaTec, up 14.8p to 269.4p, and easyJet, up 26.6p to 504.8p.
The biggest fallers on the FTSE 100 were Severn Trent, down 113p to 2399p, National Grid, down 38.4p to 933.6p, Haleon, down 14.1p to 400.8p, United Utilities, down 31.8p to 944.4p, and Pearson, down 43.5p to 1335.5p.
