Greggs’ share price saw a 6% year-on-year rise yesterday following the government’s decision to make a U-turn over the pasty tax.

The high street retail bakery chain’s share price peaked at a high of 506.50p during early morning trading on Tuesday (29 May) at 8.16am, following the news that the Chancellor of the Exchequer, George Osborne, had decided to scrap plans to add 20% VAT to hot takeaway bakery products served straight from the oven.

Greggs’ shares dropped by 4% to 528p on Wednesday 21 March when Osborne first outlined the now-scrapped VAT rules in the Budget, decreasing the company’s overall value by £20m. The company’s share price has fallen 14.5% overall in the past three months.

The firm had warned that, with savoury sales representing over a third of its turnover, implementation of the tax could have had a material impact on its sales and profit.

Greggs published an interim management statement on 16 May, ahead of its annual general meeting, reporting a 4.3% increase in total sales in the first 19 weeks of its new financial year. But the company additionally revealed its like-for-like sales (LFLs) suffered – dipping by 1.8%.

British Baker will be reporting on the pasty tax U-turn in the next issue of the magazine, published on Friday 1 June.