UK Budget Deficit Soars; Banks Drop

Mayank Mehta
21 Jan, 2010
New York City

The UK budget deficit surged in December to a record

[R]4:00 PM London, 11:00 AM New York – The UK budget deficit surged in December to a record £119.9 billion and net debt soared to £870 billion or 61.7% of gross domestic product. Stocks in London trading fell after miners and banks led the decliners. Enterprise Inns surged 20% after profit decline slowed.[/R]

UK stocks declined on the weakness in mining sector and banks. Royal Bank of Scotland dropped 7% to 35.32 pence and Barclays Plc declined 6% to 283 pence.

In London FTSE 100 Index closed lower 85.7 or 1.6% to 5,335.10 and the pound edged lower to close at $1.613 and to €1.149.

UK budget gap in December widened to £15.7 billion from £13.8 billion a year ago month according to the latest data released by the Office for National Statistics. The cash requirements in the month surged to £23.6 billion from £21.6 billion a year ago.

The deficit for the fiscal year from April to December increased to £119.9 billion from £63.3 billion a year ago period and net debt increased to 61.7% of gross domestic product or £870 billion. The deficit is record high since 1974, when records keeping began.

Gainers & Losers

Begbies Traynor Group plc plunged 11.4% to 93.00 pence after the professional services firm said first-half revenues rose 21% to £34.2 million from £28.3 million a year ago. Net profit for the first-half rose 258.5% to £2.33 million compared to £0.65 million a year ago.

BlueBay Asset Management plc dropped 1.5% to 359.90 pence after the fixed income fund manager said new investments to its corporate bond funds and other debt products lifted assets by 10% in the fiscal second quarter, to $34.3 billion (€24.4 billion).

EasyJet plc added 5% to 383.50 pence after the low-cost airline said first quarter revenues rose 10.5% to £607.5 million from £550 million a year ago. Passenger revenue rose 8.1% to £481 million from £445 million a year ago.

Enterprise Inns Plc surged 20% to 113.5 pence after the pub operator said profit per pub decreased 4% in the last sixteen weeks ending in Jan 16. The decline was lower than annual decline of 8% in the previous year.

Euromoney Institutional Investor PLC decreased 0.8% to 460.00 pence after the business information publisher said revenues in the quarter to December decreased 16% to £71 million.

Kentz Corporation Limited increased 3.1% to 216.50 pence after the engineering group said that fourth quarter sales are likely to be ahead of expectations. The company also cited recent data from the International Energy Agency December report that 2010 global demand is likely to be near 86.3 million of barrels per day, nearing the 2008 peak demand of 87 mbpd.

London Stock Exchange Group Plc fell 0.1% to 695.00 pence after the bourse operator said third quarter revenues fell 9% to £154.9 million from £169.4 million a year ago. Capital markets revenues fell 13% to £69.9 million from £80.1 million a year ago.

NCC Group plc closed unchanged at 400 pence after the computer-security firm said first-half revenues rose 22% to £25.4 million from £20.8 million a year ago. Net profit for the first-half rose 17% to £3.89 million or 11.2 pence per diluted share compared to £3.32 million or 9.5 pence per share a year ago.

PayPoint plc rose 1.1% to 425.00 pence after the cash and Internet payments processor said third quarter net revenues rose 3% to £21 million.

Quintain Estates and Development plc gained 3.2% to 63.75 pence after the property investor completed rights issue and £183.5 million.

Shaftesbury Plc rose 0.1% to 391.50 pence after the real estate investment trust announces three lease agreements at St. Martin''s Courtyard, Covent Garden, held in the Longmartin, joint venture with The Mercers'' Company.

St. James''s Place plc added 2.2% to 282.20 pence.

SSL International plc rose 1.1% to 766.50 pence after the consumer products maker said sales growth seen in the first half of the fiscal year is encouraging and its recent acquisitions in the Commonwealth of Independent States are also continuing to perform ahead of its expectations.

Tullow Oil plc added 1.0% to 1,339.00 pence after the company announces that the Tweneboa-2 exploratory appraisal well, being drilled 6 km southeast of the Tweneboa-1 discovery, has intersected a significant combined hydrocarbon column.

United Utilities Group PLC increased 4.3% to 530.50 pence after it expressed its confidence for the current fiscal year earnings and said its balance sheet is “robust.”

William Hill PLC rose 2.0% to 195.80 pence and the betting and gaming company announces completion of Codere’s purchase of company’s 50% stake in the Victoria Apuestas joint venture.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 15 increased, 87 declined and None were unchanged.

The Royal Bank of Scotland Group Plc decliners in the FTSE 100 index with a loss of 7.05% followed by losses in Fresnillo Plc of 6.19%, in Anglo American Plc of 6.15%, in Kazakhmys Plc of 6.02%, and in Barclays Plc of 5.93%.

British Airways Plc led gainers in the FTSE 100 index with a rise of 3.61% followed by increase in United Utilities Group Plc of 3.24%, in International Power Plc of 2.47%, in Reed Elsevier Plc of 1.96%, and in Carnival Plc of 1.77%.