The latest US services data disappointed traders, with a flat reading for February missing expectations of a small uplift in activity.
Nevertheless, it was not enough to drag the FTSE too significantly, as the extension of furlough particularly helped to buoy trading.
The FTSE 100 closed 61.72 points, or 0.93 per cent, higher at 6,675.47 yesterday.
The business rates exemption for retail, hospitality and leisure businesses will now run until the end of June.
The Stamp Duty Land Tax holiday was extended by three months until June 30 and then for cheaper homes until the end of September.
This led to Shares in housebuilders gaining, with York-based Persimmon one of the top risers in the FTSE 100, up nearly 7 per cent.
Pub firms JD Wetherspoon and Premier Inn owner Whitbread also rose, helped by an extended VAT cut for the hospitality sector.
Jacob Nell, economist at Morgan Stanley, said: “The UK’s fiscal stance has become much looser, and more focused on investment, more in line with its US and Euro area counterparts.
“This shift changes our view of the UK. Near term, we see a stronger and more investment-focused recovery bringing forward the return to pre-Covid-19 levels of output.”
The Chancellor’s future hikes will increase the tax burden to its highest since the 1960s, rising from 34 per cent to 35 per cent of GDP by the mid-2020s. Valentin Marinov, head of G10 foreign exchange research at Credit Agricole, said: “The UK is thus to become the first major economy to consider such measures.”
The biggest risers in the FTSE 100 were Barratt Developments, up 48.4p at 732.6p; Persimmon, up 185p at 2,895p; IAG, up 13.8p at 216.5p; BT, up 8.5p at 134.4p; and Taylor Wimpey, up 9.95p at 175.85p.
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