Market Report: Barclays warned that the Budget could kill annuities market

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The Independent Online

The £12bn annuities market could be at risk of extinction, Barclays warned yesterday.

George Osborne's decision to scrap compulsory annuities in Wednesday's Budget has knocked over £4bn off the value of Britain's life insurers, and analysts at Barclays warned that the move "has the potential to lead to the demise of the UK individual annuity market".

Investors yesterday continued to punish those in the sector, as well as bookies, who were also hit by the Budget. William Hill, down 4.9p to 346.6p, admitted that it had underestimated the cost of the Chancellor's crackdown on fixed-odds betting machines, upping its projection from £16m to £22m.

GlaxoSmithKline, down 26p to 1,629p, weighed on the Footsie after poor results from trials of a lung cancer treatment.

The FTSE 100 closed down 30.69 points at 6,542.44, with traders spooked by hints from Janet Yellen, the new chairman of the US Federal Reserve, that she may increase interest rates sooner than expected. One of the few risers on the index was the energy group SSE, up 48p to 1,486p, boosted by an upgrade from Morgan Stanley.

There was a strong crop of results among mid-cap listed companies. The upmarket estate agent Savills, up 22.5p to 638.5p, revealed a 34 per cent jump in pre-tax profits to £75.2m, with £6bn worth of UK homes sold last year.

Ted Baker, up 33p to 2,238p, said it had become global as the fashion brand hailed a 26.7 per cent increase in pre-tax profit to £40m. The Tory advertising agency M&C Saatchi announced record revenues and operating profit, but fell 2p to 297.5p.

The shopping centre owner Intu tapped shareholders for £500m to fund a £867m deal with Westfield yesterday. The Lakeside owner has bought two sites from Westfield, with a 50 per cent stake in a third. Investors didn't like the price of the issue and Intu fell 14.9p to 308.3p.

The Aim-listed online service procurement platform blur group announced its biggest contract, a legal project worth $15m (£9m). It added 17.5p to 495p.