By Steve Goldstein
U.K. builders slumped Monday after the government said it was seeking £4 billion from the industry to deal with unsafe cladding.
Builders including Persimmon /zigman2/quotes/206444744/delayed UK:PSN +1.78% , Berkeley Group /zigman2/quotes/202576163/delayed UK:BKG +2.08% and Taylor Wimpey /zigman2/quotes/208623755/delayed UK:TW +1.76% each fell as Secretary of State for Levelling Up, Housing and Communities Michael Gove gave builders a deadline of early March to agree a “fully funded plan of action” including remediating unsafe cladding on 11-to-18 meter buildings.
Cladding concerns have weighed on the sector since the 2017 fire at Grenfell Towers in London that led to 72 deaths.
Analysts at UBS say a worst-case scenario would be a tax increase that would reduce sector earnings per share by 11%, but a likely outcome is “some sort of burden sharing.”
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.19% slipped 0.1%, with the U.K. index outperforming European rivals that have a greater technology weighting.
Hopes for rising bond yields lifted the U.K. financial sector, as Barclays /zigman2/quotes/208409333/delayed UK:BARC -0.37% and HSBC Holdings /zigman2/quotes/203901799/delayed UK:HSBA +1.00% each rose 2%.
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