French Business Confidence Improved, UK Debt-GDP Ratio Increased to 97.5%

Bridgette Randall
21 Dec, 2023
Frankfurt

European markets lacked direction with a downward bias, and investors booked profit ahead of the yearend.

The DAX index and the CAC-40 index edged down 0.5% in Thursday's session but gained above 18% and 14%, respectively, in the year so far.

Investors also reviewed the latest economic data from France and the government finance update from the UK.

 

French Business Confidence Indicator Rises to a 5-month High

The manufacturing climate indicator in France rose to 100 in December from 99 in November, the statistical agency INSEE reported Thursday.

The index rose to a five-month high since July, after inflation continued to ease and consumer spending remained resilient.

The opinion for finished goods inventory and past production showed improvement, but the opinion on overall new orders remained unchanged.

Meanwhile, the outlook for selling prices showed a slight deterioration, and the indicator measuring perceived economic uncertainty showed a slight improvement.

 

UK Public Sector Borrowing Remains Elevated   

Public sector borrowing in November declined from a year ago and from the previous month, but the November month borrowing was still the fourth-largest since record-keeping began in 1993, the Office for National Statistics reported Thursday.

Borrowings, excluding public sector banks, eased to £14.33 billion, a decline of £0.9 billion from a year ago and eased from £16.0 billion in October. 

The central government's spending rose from £0.7 billion to a record high of £87.6 billion.

Government spending on goods and services was £33.6 billion, net social benefits were £24.2 billion, subsidies were £2.2 billion, and the interest payable on central government debt was £7.7 billion.

The central government's receipts were £77.6 billion, an increase of £3.6 billion from a year ago and the highest in November since monthly records began in 1993.

Of this £77.6 billion, tax receipts were £58.2 billion, £2.7 billion more than in November 2022, with value-added tax (VAT) receipts and income tax receipts both increasing by £1.4 billion.

Borrowing in the financial year-to-November 2023 was £116.4 billion, £24.4 billion more than in the same eight-month period last year and the second highest financial year-to-November borrowing on record, the ONS release noted.

Public sector net debt rose 1.8% to £2.67 trillion at the end of November and rose to 97.5% of the UK's gross domestic product.

Excluding the Bank of England, debt was £2.42 trillion, or about 88.3% of GDP, or £252.8 billion (or 9.2 percentage points) lower than the wider measure.

 

Europe Indexes and Yields

The DAX index decreased 0.5% to 16,651.01, the CAC-40 index decreased 0.5% to 7,549.27, and the FTSE 100 index declined 0.4% to 7,681.78.

The yield on 10-year German bonds decreased to 1.97%; French bonds inched lower to 2.48%; the UK gilts inched lower to 3.54%; and Italian bonds inched lower to 3.60%.

The euro traded higher to $1.094, the British pound inched higher to $1.262, and the U.S. dollar eased to 86.18 Swiss cents.

Brent crude decreased $0.06 to $79.66 a barrel, and the Dutch TTF natural gas decreased by €1.82 to €35.35 per MWh.

 

Europe Stock Movers

Swisscom AG decreased 0.6% to CHF 505.60 after reports suggested that the telecom operator is looking to bid for Vodafone Italia.

Alstom SA declined 0.6% to €12.12, and the company emerged as the winning bidder for a €900 million contract to maintain regional rolling stock in Victoria, Australia.

Sanofi SA dropped 0.4% to €88.80 after the company said it was ending the global clinical development program of tusamitamab ravtansine to treat certain types of lung cancer after the phase 3 trial did not meet its criteria.

Eni SpA decreased 0.05% after the Italian energy company announced an investment agreement with Switzerland-based Energy Infrastructure Partners AG.

The Swiss investment company agreed to invest €0.7 billion in Eni Plentude SpA, which focuses on gas and energy distribution and manages the electric vehicle charging station network.

Artemis Alpha Trust fell 1.0% to 338.56 pence after the company reported a fiscal first-half pre-tax loss of £11.4 million.

HICL Infrastructure PLC decreased 0.5% to 136.30 pence after the investment company announced it had agreed to acquire a 3.1% stake in the A63 highway concession in France for £20 million from another shareholder.