Record UK Government Borrowing

Arthi Gupta
21 Sep, 2010
New York City

The UK indexes climbed after Ireland successfully completed bond sales. The Confederation of British Industry urged prioritization of spending on investment for economic growth. The UK public sector net borrowing soared in August. Irish PPI slackened in August.

[R]4:15 PM London – The UK indexes climbed after Ireland successfully completed bond sales. The Confederation of British Industry urged prioritization of spending on investment for economic growth. The UK public sector net borrowing soared in August. Irish PPI slackened in August.[/R]

In London trading, FTSE 100 Index gained 14.97 or 0.27% to 5,616.21 and the pound edged higher to close at $1.5562.

Ireland successfully raised €1.5 billion through the sale of four and eight-year bonds, alleviating concerns of falling investor confidence in the country''s economy. Ireland sold €500 million of 4 year bonds at a yield of 4.767% and €1 billion of 8 year bonds at a yield of 6.023%. The bid-to-cover-ratio was at 5.1.

The UK public sector net borrowing reached a record high for the month of August. Public sector net borrowing, including financial interventions, increased to £15.3 billion in August from £1.99 billion in July, according to data published from the Office for National Statistics today. A year ago, borrowing was £13.5 billion.

Excluding financial interventions, net borrowing came in at £15.9 billion, which was £1.8 billion higher than in August 2009 and record for the month of August. The year-to-date borrowing of public sector excluding financial interventions fell to £58.1 billion. The budget forecast for the current fiscal year is £149 billion.

Compared to a year ago, Irish producer price index rose 0.5% August versus a 0.9% growth in July, according to a report released by the Central Statistics Office today. On a monthly basis, manufacturing output prices rose 0.2% in August, compared to a 0.6% fall in July.

The Confederation of British Industry on Monday urged the government to protect economic growth in its forthcoming spending review. The lobby called on the government to prioritize spending on investment in infrastructure, knowledge assets like research and development; and human capital via education and skills.

""Cuts will necessarily affect GDP growth in the short term, but smart choices will give the economy the ability to grow,"" Ian McCafferty, CBI Chief Economic Adviser commented. ""The Government must use its limited resources to support a healthy private sector recovery so it can pick up the slack from the public sector.""

Gainers & Losers

Dealogic (Holdings) plc surged 3.70% to 210.00 pence after the company that develops software and provides analytical data for the investment banking industry reported first-half revenues increased 11.5% to $48.05 million from $43.10 million. Net income in the period rose 9.9% to $10.96 million from $9.97 million a year ago period. On a per share basis, earnings were 14.4 cents versus 13.0 cents in the past year.

Hambledon Mining plc plunged 10.59% to 5.25 pence after the gold mining company reported first-half revenues advanced 27.3% to £7.22 million from £5.67 million in the first-half of fiscal 2009. Loss in the period narrowed 72.3% to £0.30 million or 0.06 pence per share compared with a loss of £1.32 million or 0.28 pence per share a year earlier.

JD Sports Fashion PLC rose 0.18% to 824.50 pence after the fashion retailer said first-half revenue climbed 18.5% to £383.89 million from £323.99 million in the same period last year. On a like-for-like basis, revenue increased 2.8% in the UK and Ireland.

Comparable same store revenues grew 3.9% in the Sports Fascias, but decreased 3.8% in the Fashion Fascias. Profit before tax in the period surged 64.3% to £16.64 million from prior year''s £10.13 million.

Morson Group plc tumbled 3.15% to 98.30 pence after the technical recruitment agency reported first-half revenue increased 0.9% to £221.84 million from £219.89 million a year earlier. Net profit in the period rose 10.7% to £3.71 million or 8.19 pence per share versus £3.35 million or 7.42 pence per share a year ago.