Boom-time for Britain? Shares soar to all-time high as City promises better to come

Handing millions of savers and pension holders a huge financial shot-in-the-arm, the FTSE 100 index soared to 6958.89, beating the previous high of 6950.6 which was set during the dot.com boom of 1999. 

Analysts said the record level would continue to climb, possibly peaking at an extraordinary 7500 by the end of next year.

The FTSE eventually closed the day on 6949.63, above its previous record close of 6930 on December 30 1999.

And City experts said the upward curve in share values would continue into next year. 

The soaring value of shares provides a major boost to savers and pension holders after a number of lean years and poor returns. ISA holders and those with other investment accounts linked to the stock market will also benefit from much more handsome returns than in recent times.

Chancellor George Osborne welcomed the news by posting on Twitter: “FTSE 100 at record high- good for pensions & savers. Comes on top of record low inflation & record high employment. #LongTermEconomicPlan”

Pensions guru Dr Ros Altmann explained: “Savers have had a really tough time in recent years, and with interest rates so low many investors are desperate for income.

"UK shares offer higher dividends than most markets, so they are attractive now especially when other investments pay so much less.”

She added: “Pension funds will benefit from rising share prices and now that the Government has changed the rules so you aren’t forced to buy an annuity, you can enjoy further gains in future rather than locking in at today’s ultra low interest rates.”

Samuel Tombs, senior UK economist at Capital Economics, said he could see the FTSE 100 reaching 7500 by 2017.

He added: “The FTSE 100’s close above its previous all-time high will no doubt be heralded as another milestone in the UK’s economic recovery.”

Today's record high came after the markets were boosted by an agreement to extend Greece’s bail-out terms.

The huge rise in share prices in recent months means that billions of pounds have been added to pension pots and savings accounts. And financial analysts said the vast climb in the value of shares was not likely to stop in the near future.

While the FTSE 100 has trailed behind Wall Street in setting a new record high, investors were helped towards the new threshold in London by relief that Greece has pulled back from the brink of tumbling out of the euro.

Global markets were also lifted today by comments from Federal Reserve chair Janet Yellen after she told US politicians that the country’s economy is making steady progress.

City analysts said the resurgence of the FTSE in London was particularly welcome after a period of volatility in the wake of the world banking crisis. 

Soaring share values were also in part down to the European Central Bank’s (ECB) decision to pump more cash into the ailing Euro economies through quantitative easing (QE). 

As a result, the FTSE 100 had been able to set the new record in spite of the fragile condition of the eurozone threatening to put the brakes on the UK’s economic recovery.

Stocks were sent even higher partly because of the ECB’s 1.1 trillion euro (£820 billion) stimulus scheme to buy bonds, or parcels of government and corporate debt.

Chris Beauchamp, Market Analyst at the spreadbetters IG, said: “After a disappointing year for UK plc, during which the FTSE 100 lost almost three per cent, 2015 has been very bright, with gains of over four per cent so far. 

“It seems odd to be talking about rising markets as Greece dominates the headlines, but the improvement in the FTSE’s performance has come on the back of a world economy that has stabilised since the depths of the crisis, while the ECB’s decision to join in the QE party has boosted the prospect that the coming year will see further improvement.”

But Michael Hewson, chief market analyst with spreadbetters CMC, warned that the danger posed by European markets to the UK remained. He said: “Anyone thinking that this is the end of the matter had better think again.

“The fear of a Greek exit has been avoided for now.”

The FTSE has seen some huge variations in the last 15 years.

After the 1999 record high of 6950.7, it has twice crashed - once after the Gulf War, falling to a lowly 3287 in 2003, and then again in 2007 as the world banking crisis began to unravel.

But in recent years, as the economy has started to recover, it has seen a steady climb to the high of today.

And Mr Beauchamp also felt that there was a real prospect that the upward trend would continue.

He said: “Record low rates around the world have meant that stock markets have become a natural destination for investors, while the steady return to health of so many economies, not least the US, has given a big boost to confidence.”