Banks, Telecoms Drag UK Indexes

Arthi Gupta
20 Jul, 2010
New York City

The UK indexes trade lower after telecommunications stocks and banks led the decline. British Chancellor George Osborne aims at simplifying the UK tax system. The BoE reported net lending contracted in May. The UK public sector net borrowing declined but gross mortgage lending rose in June.

[R]4:30 PM London – The UK indexes trade lower after telecommunications stocks and banks led the decline. British Chancellor George Osborne aims at simplifying the UK tax system. The BoE reported net lending contracted in May. The UK public sector net borrowing declined but gross mortgage lending rose in June.[/R]

In London FTSE 100 Index traded lower 11.64 or 0.23% to 5,137.13 and the pound edged lower to close at $1.5288.

British Chancellor George Osborne appointed a new board of tax experts to simplify the complicated tax system.

Osborne said the body was established to attract foreign investors to the country. ""The previous government took a complex tax system and made it even worse. A decade of meddling and intervening has made the tax affairs of millions of families and businesses across the UK extremely complicated,"" he said. ""Simpler, more competitive taxes will help us show the world that Britain is open for business.""

The flow of net lending to UK businesses remained negative in May, according to the latest credit conditions survey released by the Bank of England today. Lending to businesses contracted by £2.3 billion in May from the £1.1 billion fall seen in April.

The BoE said credit availability to businesses overall increased, The BoE said spreads between effective interest rates and Bank Rate and Libor remain significantly wider than in late 2008, particularly on interest-bearing credit cards, reflecting in part heightened credit risk.

The UK’s public sector borrowing in June fell to £14.5 billion from a revised borrowing of £17.1 billion in May, according to data released by the Office for National Statistics today.

During April to June, public sector net borrowing totaled £40.3 billion, which was £0.7 billion lower net borrowing than in the same period of 2009/10.

At the end of June, government debt was at the highest level since March 1993 and equivalent to 63.9% of GDP.

The UK gross mortgage lending rose 15% in June to £13.1 billion from £11.4 billion in May, according to data released from the Council of Mortgage Lenders today. Annually, mortgage lending rose 7% from £12.2 billion.

Gross lending in the second quarter rose 17% to £35 billion from the first quarter of this year. Lending in the first half of 2010 remained unchanged from the first half of 2009.

The manufacturing sector saw output rise at the fastest rate in fifteen years in the three months to July, as demand for UK-made goods continued to strengthen and firms rebuilt their stocks, the Confederation of British Industry said today. But the pace of manufacturing growth is expected to be slower in the coming quarter.

A strong rise in home-grown orders helped boost output. The rise in output was driven by a shift in the stock cycle, which saw firms building up inventories of raw materials and finished goods.

Looking ahead to the next three months, manufacturing output is expected to rise again, although at a slower pace, as growth in domestic and export orders is expected to moderate. The balances for expected domestic and export orders are +4% and -3% respectively.