British equity markets rose on Tuesday as investors positioned themselves ahead of Wednesday’s budget announcement, buoyed by gains in financial and consumer-related shares.

The FTSE 100 closed up roughly 0.8 per cent, while the domestically oriented FTSE 250 rose about 1.0 per cent, marking its strongest session in over a month.

Banks led the advance in the larger index after a note referencing a key report indicated the sector may be spared new taxes in the impending budget.

Lloyds Banking Group climbed 3.8 per cent, Barclays added 2.4 per cent and NatWest Group advanced 3.7 per cent.

Consumer staples and retail names also posted strong performances: Burberry Group gained 4.7 per cent, while the personal-goods sector led sectoral gains with a 3.9 per cent increase.

Home-improvement retailer Kingfisher rose 5.9 per cent after raising its full-year profit guidance, leading the construction and materials sector, which advanced 2.5 per cent.

Conversely, the non-life insurance sector weighed, with Beazley plunging 9.2 per cent after cutting its annual premiums forecast, dragging the sector down 2.7 per cent.

Despite the upbeat market tone, the backdrop remains cautious: British retail sales have fallen and consumer confidence has slid to its lowest in 17 years, underscoring the fragility of spending heading into what is expected to be a pivotal budget.

Authorities are widely expected to avoid raising the main rate of income tax, though increases in other levies remain on the table.

In fixed-income markets, gilt yields fell and government bonds rallied as investors anticipated stabilising fiscal policy.

With the budget looming, sentiment suggests markets are banking on incremental support for households and selective tax reforms rather than dramatic fiscal shifts.

The coming hours will test how much of the optimism is priced in and whether any surprises emerge from the Chancellor’s statement.