UK equity markets and sterling were largely unfazed by today's Spending Review with investors unsuprised by the level of the cuts.
At 1.57pm, the FTSE100 lost some of this morning's gains but was still marginally up 0.01% or 0.61 points to 5,704.50 as investors digested George Osborne's speech.
However, banks were hit after Osborne said details of legislation to introduce a permanent tax levy will be published tomorrow.
RBS declined 1.75% to 46.13p, while HSBC was down 0.34% to 70.26p and Barclays dipped 0.02% to 288.8p.
Meanwhile, sterling edged up against the US dollar during the speech although it had fallen to a near-four month low against the Greenback earlier today after Bank of England meeting minutes showed one MPC member had voted for further quantitative easing.
The pound was up 0.17% to $1.5733, but down 0.87% to €1.1342.
Mark Bolsom, head of the UK Trading Desk at Travelex Global Business Payments, says: "Markets have been extremely volatile this morning as austerity fears sparked knee-jerk reactions from many businesses.
"However in spite of their last minute concern, Osborne’s announcement is yet to fuel a market reaction and in fact, sterling gained against the dollar during his speech.
"This is fairly unsurprising, given that most of the bad news will have been priced in and it will take the markets a while to digest the sheer scale of the cuts.”
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