UK Budget Targets Lower Deficit, Borrowings

Mayank Mehta
24 Mar, 2010
New York City

Chancellor of Exchequer Darling trimmed his budget deficit forecast by 8% to 567 billion over the next five years. He also targeted deficit to shrink from 11.8% to fall to 4% by April 2015. The government plans to borrow

[R]4:00 PM London, 11:00 AM New York – Chancellor of Exchequer Alistair Darling trimmed his budget deficit forecast by 8% to 567 billion over the next five years. He also targeted budget deficit to shrink from 11.8% to fall to 4% by April 2015. The government plans to borrow £185.4 billion in the fiscal year beginning April. The pound edged lower.[/R]

UK stocks traded sideways after Chancellor of Exchequer Alistair Darling predicted smaller budget deficit and government borrowing to decline after 2014.

In London FTSE 100 Index closed higher 4.25 or 0.07% to 5,677.88 and the pound edged lower to close at $1.491 and edged higher to close at €1.118.

Darling estimated budget deficit to fall to £89 billion by 2014 from £167 billion in the current fiscal year ending in March. The government borrowing is expected to decline to £163 billion in the next fiscal year ending in March 2011 and then drop further to £74 billion in the fiscal year beginning in April 2014.

Chancellor left his economic forecast between 1% and 1.5% but lowered growth estimate to 3.5% from the previous 3.75% estimate.

Gainers & Losers

Alliance Pharma plc closed unchanged at 162.00 pence after the pharmaceutical company said 2009 sales rose 44% to £31.2 million from £21.8 million a year ago. Net profit for the year rose 64% to £4.11 million or 2.14 pence per diluted share compared to net profit of £2.51 million or 1.49 pence per share a year.

Bellway plc gained 3.8% to 748.00 pence after the home builder said first half revenues rose 13% to £360.8 million from £320.2 million a year ago. Net profit for the first half was £14.0 million or 11.6 pence per diluted share compared to net loss of £35.0 million or 30.5 pence per share a year.

BG Group plc rose 0.7% to 1,184.00 pence after the company today signed a Liquefied Natural Gas sales contract with the China National Offshore Oil Corporation, concluding negotiations announced in May 2009 for the supply of 3.6 million tons per annum of LNG over a 20-year period.

easyJet plc rose 0.1% to 454.00 pence after the discount airline announced that Carolyn McCall will join the Board of the company as Chief Executive. Carolyn joins from Guardian Media Group where she had a number of positions including, since 2006, the position of Group Chief Executive.

Eurasian Natural Resources Corporation PLC added 0.6% to 1,202.00 pence after the diversified natural resources group said 2009 revenues fell 44% to $3.8 billion to $6.8 billion a year ago. Net profit for the year fell 60% to $1.05 billion or 81 cents per diluted share compared to net profit of $2.6 billion or 205 cents per share a year ago.

Hochschild Mining plc declined 1.6% to 278.30 pence after the precious metals miner said 2009 revenues rose 24.4% to $539.7 million to $433.8 million a year ago. Net profit for the year was $98.1 million or $0.31 per diluted share compared to net loss of $24.7 million or $0.08 per share a year ago.

IQE plc fell 1.4% to 17.50 pence after the manufacturer of advanced semiconductor materials 2009 revenues fell 13% to £52.7 million from £60.5 million a year ago. Net profit for the year was £2.06 million or 0.47 pence per diluted share compared to net loss of £1.4 million or 0.32 pence per share a year.

J Sainsbury plc rose 0.4% to 329.50 pence after the supermarket operator announced fourth quarter trading statement total sales for fourth quarter up 7.1%. Comparable sales for fourth quarter increased 4.8%.

Melrose Resources plc dropped 4.0% to 307.00 pence and the oil and gas explorer said 2009 revenues fell 40% to $224.4 million to $373.3 million a year ago. Net loss for the year was $23.9 million or 21.3 cents per diluted share compared to net profit of $68.3 million or 61.8 cents per share a year ago.

Mitchells & Butlers plc increased 1.8% to 296.50 pence.

Nichols plc fell 1.9% to 353.00 pence after the soft drinks group said 2009 revenues rose 29% to £72.4 million from £56.2 million a year ago. Net profit for the year rose 182% to £8.35 million or 22.57 pence per diluted share compared to net profit of £2.96 million or 8.10 pence per share a year.

Resolution Limited dropped 0.2% to 77.20 pence after the life assurance and asset manager said 2009 revenues were £31.5 billion. Net profit for the year was £1.16 billion or 124.13 pence per diluted share compared to net loss of £0.7 million or 0.11 pence per share a year ago.

Smiths Group plc rose 2.2% to 1,165.00 pence after the global technology company said first half revenues fell 1% to £1.28 billion from £1.29 billion a year ago. Net profit for the first half rose 1% to £109.5 million or 27.9 pence per diluted share compared to net profit of £108.6 million or 27.7 pence per share a year.

SOCO International plc dropped 1.1% to 1,636.00 pence and oil and gas exploration and Production Company said 2009 revenues rose 137% to $131.0 million to $55.3 million a year ago. Net profit for the year fell 88% to $51.1 million or 61.9 cents per diluted share compared to net profit of $411.1 million or 497.1 cents per share a year ago.

Tenon Group PLC fell 0.5% to 43.50 pence after the financial-advice company said first half revenues fell 1.5% to £73.8 million from £74.9 million a year ago. Net profit for the first half fell 74% to £1.22 million or 0.61 pence per diluted share compared to net profit of £4.66 million or 2.35 pence per share a year.

TUI Travel PLC rose 1.0% to 307.30 pence and the company guided a significant recovery in consumer demand for leisure holidays.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 36 increased, 59 declined and 7 were unchanged.

Aviva Plc decliners in the FTSE 100 index with a loss of 4.38% followed by losses in Fresnillo Plc of 2.80%, in Wolseley Plc of 2.13%, in InterContinental Hotels Group Plc of 2.12%, and in Johnson Matthey Plc of 1.66%.

Lloyds Banking Group Plc led gainers in the FTSE 100 index with a rise of 2.17% followed by increase in Petrofac Limited of 2.04%, in Shire Plc of 1.89%, in The Royal Bank of Scotland Group Plc of 1.79%, and in Smiths Group Plc of 3.46%.