UK Money Supply, Borrowings Decline

Arthi Gupta, Mayank Mehta and Sanjay Barot
18 Jun, 2010
New York City

The UK indexes rose on optimistic economic data. The broadest measure of money supply decreased by

[R]5:00 PM London – The UK indexes rose on optimistic economic data. The broadest measure of money supply decreased by £15.1 billion and public sector net borrowing declined to £16 billion in May. UK gross mortgage lending increased 7% in May. BP Plc faces harsh criticism.[/R]

Ireland''s producer prices decrease at a slower pace in April. BP Plc CEO receives flak from the U.S. Congressional investigators.

BP CEO Tony Hayward on Thursday came under harsh questioning by a Congressional panel investigating the explosion of the Deepwater Horizon rig in the Gulf of Mexico and the subsequent, and ongoing, spill of oil.

""The explosion and fire aboard the Deepwater Horizon and the resulting oil spill in the Gulf of Mexico never should have happened - and I am deeply sorry that they did,"" he said. ""None of us yet knows why it happened.""

He added, ""Whatever the cause, we at BP will do what we can to make certain that an incident like this does not happen again.""

But Hayward''s apologies were not enough to shield him from harsh questioning at the hearing.

Banco Santander said that its affiliate Santander UK has submitted an offer in the tender process of around 300 branches of the Royal Bank of Scotland.

In London FTSE 100 Index traded higher 13.58 or 0.26% to 5,267.47 and the pound edged lower to close at $1.480 and edged higher to close at €1.196.

The Bank of England said today its M4 money supply stagnated on a monthly basis in May after recording a slight increase in April. Consequently, the annual growth slowed to 2.8% in May from 3.2% in April.

The central bank said M4 lending decreased by £15.1 billion. That represents a monthly fall of 0.6% following April''s 0.4% decline. The twelve-month growth rate fell to 2.5% from 4.1% in the previous month.

British public finance position for May was better than expected due to improved tax receipts.

Public sector net borrowing declined to £16 billion in May compared with £17.4 billion recorded in May 2009, the Office for National Statistics said in a report today. But the deficit increased from a revised £8.32 billion-shortfall seen in April.

Public sector net debt was £903 billion at the end of May 2010, which was equivalent to 62.2% of GDP. This compared to £774 billion or 55.4% of GDP seen at the end of May 2009.

UK gross mortgage lending increased 7% in May to £11.3 billion from £10.5 billion in April, the Council of Mortgage Lenders said today. Annually, lending climbed 10% in May.

For 2010, gross lending may marginally undershoot the existing forecast of £150 billion, CML said.

The ground has been cleared for next week''s Budget to be the start of an austerity drive to get the public finances onto a more sustainable footing. We do not expect it to include housing and mortgage specific direct tax measures,"" CML economist Paul Samter said.

Ireland''s producer prices declined at a slower pace in April. The manufacturing output price index dropped 0.4% year-on-year in April, slower than the 0.9% fall in the previous month, according to a report released by the Central Statistics Office today.

Spanish bank Banco Santander S.A. announced today that its affiliate Santander UK has submitted an offer in the tender process of nearly 300 branches of Royal Bank of Scotland Group Plc due to take place in the UK.

Santander is currently the only bidder for the business likely to be worth around £1.8 billion. With the acquisition of banking and financial services providers Alliance & Leicester, Bradford & Bingley, and Abbey National in the recent years, Santander already has a substantial presence on UK High Street.

RBS, 83% state-owned after it was bailed out in the financial crisis, is reportedly selling off the branches under Williams & Glyn brand.

Gainers & Losers

Emblaze Limited, the technology firm traded unchanged at 36.00 pence.

Henderson Group plc, the investment management firm rose 0.1% to 131.60 pence.

Innovision Research & Technology plc, the wireless communications technology firm surges 76.3% to 33.50 pence.

Lamprell plc, the provider of specialist engineering services rose 6.7% to 222.50 pence.

Roxi Petroleum Plc, the oil and gas exploration and production company rose 7.5% to 7.80 pence.

Staffline Recruitment Group plc, the recruitment and training specialist surges 18.5% to 84.14 pence.

Tracsis Plc, the provider of consultancy services to the rail industry traded unchanged at 51.50 pence.