Paris has overtaken London as Europe’s biggest stock market as the poor growth outlook for the UK continues to weigh on assets.
According to Bloomberg complied index, London lost the top spot after the combined market capitalisation of major Paris share exchanges overtook the UK capital.
UK shares have continued to fall this year while French luxury goods makers LMVH and Gucci owner Kering have been buoyed by China’s potential relaxation of its zero-COVID-19 policy.
UK equities are now worth $2.821trn compared to $2.823trn for French equities, according to Bloomberg.
The gap had been narrowing between the French and UK stock markets since the Brexit vote in 2016 and was compounded in late September when investors rejected the policies of then Prime Minister Liz Truss.
Currency movements have also helped close the gap. Sterling is currently 13% down versus the US dollar while the euro is 9% down.
The UK gilt market went into freefall as Truss and then UK Chancellor Kwasi Kwarteng unleashed the largest tax cuts since the 1970s, while fears were also raised about spiralling government debt at a time of rising interest rates.
UK gilts had their largest one-day increases in decades, according to Deutsche Bank’s head of global fundamental credit Jim Reid.
According to the Resolution Foundation, the ‘mini budget’ could have cost the UK economy around $30bn.
Following the budget, former US Treasury Secretary Larry Summers told Bloomberg: “It makes me very sorry to say, but the UK is behaving a bit like an emerging market turning itself into a submerging market.
The move led the London Stock Exchange to widen the maximum spread on UK gilts trading as a new round of sell-offs grips UK sovereign debt.