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 PSN, -4.44%, Berkeley Group BKG, -2.86% and Taylor Wimpey TW, -2.60% 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 UKX, -0.09% 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 BARC, +2.10% and HSBC Holdings HSBA, +1.99% each rose 2%.
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