UK Public Sector Borrowing Narrows; Thomas Cook Plunges 72%

Arthi Gupta
22 Nov, 2011
New York City

The UK indexes traded sideways and the public sector net borrowing narrowed in October. The government imposed financial restrictions on Iranian banks. Thomas Cook plunged 72% after it sought access to more cash in lean times.

[R]2:30 PM London – The UK indexes traded sideways and the public sector net borrowing narrowed in October. The government imposed financial restrictions on Iranian banks. Thomas Cook plunged 72% after it sought access to more cash in lean times.[/R]

Stocks in London trading faltered as world commodities prices declined and investor sentiment in the nation, in Europe and across the Atlantic worsen.

The British government decided to impose new financial restrictions on Iranian banks and said Iranian banks were “financing” the country''s nuclear program, Chancellor of the Exchequer, George Osborne announced on Monday.

UK banks have also been involved in financing the nation’s nuclear weapons program and the defense industry.

The U.S. bi-partisan committee of 12-member panel of House and Senate members yesterday failed to agree on a plan to cut at least $1.2 trillion of debt over 10 years.

In London, FTSE 100 Index gained 4.16 or 0.1% to 5,227.14 and the pound edged lower to $1.5637.

Confidence in the stability of the UK financial system as a whole declined sharply to its lowest level since the second-half of 2009, the biannual systemic risk survey conducted by the Bank of England showed on Tuesday.

Looking over a short-term horizon, 54% of respondents found the probability of a high-impact event to be high or very high in the second-half of the year, while 43% found it to be medium and only 3% found it to be low or very low.

UK Deficit Narrows

The UK public sector net borrowing excluding the temporary effects of financial interventions was £6.5 billion in October; £1.2 billion lower than in the same period of last year, data from the Office for National Statistics showed today.

The year-to-date government borrowing in the current fiscal year was £68.3 billion in October compared to £78.7 billion a year ago.

Public sector net debt at the end of October was £966.6 billion, equivalent to 62.3% of GDP. During the same period of 2010, debt amounted to £836.8 billion or 56.5% of GDP.

Gainers & Losers

Enterprise Inns plc soared 7.8% to 31 pence after the operator of pubs, reported fiscal year 2011 revenue decreased 6.2% to £711 million from £758 million a year earlier. Profit for the year fell 7.7% to £24 million or 4.8 pence per share compared to £26 million or 5.2 pence per share last year.

Halma Plc dipped 0.2% to 317.60 pence after the safety equipment maker reported first-half revenues grew 12% to £280 million from £249.08 million in the previous year. Pre-tax profit for the period improved 8% to £51.28 million from £47.27 million in the previous year.

HomeServe Plc slumped 15.4% to 211.20 pence after the home insurance firm reported first-half revenues increased 25% to £213.13 million from £171.05 million in the prior year. Pre-tax profit for the period rose 2.2% to £18.18 million from £17.79 million in the previous year.

Mitchells & Butlers Plc rose 1.4% to 219.80 pence after the pub and restaurant operator reported fiscal year 2011 revenue declined 9.3% to £1.796 billion from £1.980 billion in the prior year. Net earnings generated for the year was £125 million or 30.5 pence per share compared to a loss of £84 million or 20.6 pence per share last year that included an exceptional property revaluation charge of £304 million.

Thomas Cook Group Plc plunged 72% to 11.53 pence after the tour operator noted that it intends to seek agreement from its lending banks to adjustments that will improve its resilience if trading conditions remain difficult.