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UK public finances beat forecasts in October, but deficit still off track – business live UK public finances beat forecasts in October, but deficit still off track – business live
(35 minutes later)
10.53am GMT
10:53
Today’s figures show that the pace of deficit reduction is “frustratingly slow”, says Martin Beck, senior economic advisor to the EY ITEM Club.
He agrees that the UK government has fallen behind its deficit reduction plan, despite cutting borrowing by £1.6bn in October to £4.8bn.
Beck says:
“The stronger October outturn and some favourable revisions to prior months meant that borrowing was £5.6bn lower than a year earlier over the first seven months of fiscal year 2016-17. But this still leaves the Government behind schedule in terms of achieving the OBR’s full year forecast. If this trend continues over the remaining five months of the year then borrowing would overshoot by around £11bn.
In reality the situation is probably a little less bleak, as forestalling associated with the pre-announced increase in dividend tax should cause a sharp rise in self-assessment income tax receipts in the first couple of months of 2017. But even allowing for this, Public Sector Net Borrowing (PSNB) looks set to come in some way above the OBR’s full-year forecast of £55.5bn.
10.46am GMT
10:46
Resolution Group’s Duncan Weldon has crunched the tax receipt data, and found that growth has tailed off a little:
UK public finances: tax receipts data suggest a *gradual* slowing of nominal growth over the past 6 months or so. pic.twitter.com/aJKhpBSSFj
(Apologies, I initially posted the wrong tax receipt numbers in the 10.04am entry, so you might need to refresh)
10.19am GMT10.19am GMT
10:1910:19
Britain’s total national debt has risen by £50bn over the last 12 months, and now stands at a decidedly lofty £1,641.6 billion pounds.Britain’s total national debt has risen by £50bn over the last 12 months, and now stands at a decidedly lofty £1,641.6 billion pounds.
But..... debt as a percentage of GDP has actually been falling for the last five months, as Britain’s economy has been growing slightly faster than the debt pile.But..... debt as a percentage of GDP has actually been falling for the last five months, as Britain’s economy has been growing slightly faster than the debt pile.
The means the national debt is 83.8% of national output, down from 84.3% in October 2015.The means the national debt is 83.8% of national output, down from 84.3% in October 2015.
10.17am GMT10.17am GMT
10:1710:17
Welcome improvement in public borrowfor Chancellor in Oct but deficit still likely exceed forecast by up to £10bn this yr.Welcome improvement in public borrowfor Chancellor in Oct but deficit still likely exceed forecast by up to £10bn this yr.
10.04am GMT10.04am GMT
10:0410:04
UK tax receipts jump UK corporatation tax receipts jump
Britain’s public finances benefitted from a 4% increased in revenues last month, says the ONS. Britain’s public finances benefitted from a pick up in tax revenues last month, says the ONS.
October is traditionally a strong month for tax receipts, and las month saw a 9% spike in corporation tax receipts, which hit the highest level for any October since 2010, Bloomberg says. Central government receipts in October 2016 were £59.1bn, up £3.8bn (or 6.8%), compared with October 2015, says the ONS.
October is traditionally a strong month for tax receipts, and last month saw a 9% spike in corporation tax receipts, which hit the highest level for any October since 2010, Bloomberg says.
But income tax receipts dipped a little.
Here’s the details of October’s tax receipts:Here’s the details of October’s tax receipts:
UpdatedUpdated
at 10.16am GMT at 11.03am GMT
9.57am GMT9.57am GMT
09:5709:57
Economist Sam Tombs of Pantheon tweets that Britain is on track to borrow around £68bn this financial year -- much more than the £55bn which was predicted in March’s budget.Economist Sam Tombs of Pantheon tweets that Britain is on track to borrow around £68bn this financial year -- much more than the £55bn which was predicted in March’s budget.
Despite Oct's figs, borrowing will = £68B this FY if trend persists. This & lower GDP f'casts mean JAMs won't get many sweetneers tomorrow pic.twitter.com/nGHUrZlUtYDespite Oct's figs, borrowing will = £68B this FY if trend persists. This & lower GDP f'casts mean JAMs won't get many sweetneers tomorrow pic.twitter.com/nGHUrZlUtY
Surely Philip Hammond will admit tomorrow that this year’s deficit target will be missed?Surely Philip Hammond will admit tomorrow that this year’s deficit target will be missed?
9.42am GMT9.42am GMT
09:4209:42
Here’s some instant reaction to October’s public finances:Here’s some instant reaction to October’s public finances:
Modest boost for Chancellor ahead of Wed's #AutumnStatement as #UK public finances see y/y in Oct. PSNBex at £4.8n (£6.4bn in Oct 2015)Modest boost for Chancellor ahead of Wed's #AutumnStatement as #UK public finances see y/y in Oct. PSNBex at £4.8n (£6.4bn in Oct 2015)
The better UK Public Finances in October were driven by a £1.7 billion rise in Corporation Tax receiptsThe better UK Public Finances in October were driven by a £1.7 billion rise in Corporation Tax receipts
9.36am GMT9.36am GMT
09:3609:36
UK public finances better than expected (but still weak).UK public finances better than expected (but still weak).
Here we go! Britain borrowed less than feared last month, but is still on track to breach this year’s deficit target.Here we go! Britain borrowed less than feared last month, but is still on track to breach this year’s deficit target.
Britain borrowed £4.796bn in October, the ONS says. That’s down from £6.4bn in October 2015.Britain borrowed £4.796bn in October, the ONS says. That’s down from £6.4bn in October 2015.
That is rather better than the £6bn which the City expected [this excludes the impact of the taxpayers’ stakes in the banking sector].That is rather better than the £6bn which the City expected [this excludes the impact of the taxpayers’ stakes in the banking sector].
It means that Britain has now borrowed £48.6bn since April 2016 - down from £54.2bn in April-October 2015.It means that Britain has now borrowed £48.6bn since April 2016 - down from £54.2bn in April-October 2015.
So the deficit has dropped by £5.6bn so far this year, which means Britain is probably missing the government’s target of a £55bn deficit for this financial year.So the deficit has dropped by £5.6bn so far this year, which means Britain is probably missing the government’s target of a £55bn deficit for this financial year.
This chart shows how much Britain has borrowed this year (the final orange line), and the final target for borrowing this financial year (the blue blob).This chart shows how much Britain has borrowed this year (the final orange line), and the final target for borrowing this financial year (the blue blob).
More to follow!More to follow!
UpdatedUpdated
at 10.00am GMTat 10.00am GMT
9.25am GMT9.25am GMT
09:2509:25
The latest UK Public Finances data are due at 9:30 am #AutumnStatementThe latest UK Public Finances data are due at 9:30 am #AutumnStatement
9.19am GMT9.19am GMT
09:1909:19
The weakness of the French economy continues to hurt Kingfisher.The weakness of the French economy continues to hurt Kingfisher.
The DIY chain has reported a 3.6% slide in like-for-like sales during the last quarter in France, where it runs the Castorama and Brico Dépôt chains.The DIY chain has reported a 3.6% slide in like-for-like sales during the last quarter in France, where it runs the Castorama and Brico Dépôt chains.
That took the shine off a 5.8% jump in comparable sales in the UK, led by its Screwfix arm.That took the shine off a 5.8% jump in comparable sales in the UK, led by its Screwfix arm.
Kingfisher CEO Véronique Laury is trying to turn things around with a new efficiency plan. But the City isn’t impressed, sending Kingfisher’s shares down 2%.Kingfisher CEO Véronique Laury is trying to turn things around with a new efficiency plan. But the City isn’t impressed, sending Kingfisher’s shares down 2%.
George Salmon, Equity Analyst at Hargreaves Lansdown, fears that Laury will struggle:George Salmon, Equity Analyst at Hargreaves Lansdown, fears that Laury will struggle:
Previous Kingfisher bosses have tried and failed with similar plans, and just now trading conditions look challenging.Previous Kingfisher bosses have tried and failed with similar plans, and just now trading conditions look challenging.
UK builders merchants have reported tougher conditions, and the French economic outlook is uncertain.”UK builders merchants have reported tougher conditions, and the French economic outlook is uncertain.”
9.00am GMT9.00am GMT
09:0009:00
Britain’s vote to leave the EU destroyed $1.5trillion of wealth and cut the number of dollar millionaires in the UK by 15%.Britain’s vote to leave the EU destroyed $1.5trillion of wealth and cut the number of dollar millionaires in the UK by 15%.
That’s according to Credit Suisse’s latest wealth report, which highlights the impact of the 16% tumble in the value of the pound since JuneThat’s according to Credit Suisse’s latest wealth report, which highlights the impact of the 16% tumble in the value of the pound since June
Michael O’Sullivan, chief investment officer in Credit Suisse’s wealth management arm, explains:Michael O’Sullivan, chief investment officer in Credit Suisse’s wealth management arm, explains:
“The impact of the Brexit vote is widely thought of in terms of GDP but the impact on household wealth bears watching.“The impact of the Brexit vote is widely thought of in terms of GDP but the impact on household wealth bears watching.
“Since the Brexit vote, UK household wealth has fallen by $1.5tn. Wealth per adult has already dropped by $33,000 to $289,000 since the end of June. In fact, in US dollar terms, 406,000 people in the UK are no longer millionaires.”“Since the Brexit vote, UK household wealth has fallen by $1.5tn. Wealth per adult has already dropped by $33,000 to $289,000 since the end of June. In fact, in US dollar terms, 406,000 people in the UK are no longer millionaires.”
The report also found that the richest % of people across the globe still own more wealth than the rest of the world put together - prompting development charity Oxfam to push the government to help the poorest in society.The report also found that the richest % of people across the globe still own more wealth than the rest of the world put together - prompting development charity Oxfam to push the government to help the poorest in society.
Here’s the full story:Here’s the full story:
8.42am GMT8.42am GMT
08:4208:42
Kit Juckes of French bank Societe Generale also expects that today’s public finances will show there’s been little progress in eliminating the deficit this year.Kit Juckes of French bank Societe Generale also expects that today’s public finances will show there’s been little progress in eliminating the deficit this year.
We look for a deficit excluding public sector banks of £6bn, a small fall from a year ago and a cumulative fall of just £2.3bn for the first seven months of the fiscal year compared to 2015/2016.We look for a deficit excluding public sector banks of £6bn, a small fall from a year ago and a cumulative fall of just £2.3bn for the first seven months of the fiscal year compared to 2015/2016.
This pace of improvement in the trend in public finances is disappointing relative to the resilience of the economy this year and limits the scope for any fiscal largesse going forwards.This pace of improvement in the trend in public finances is disappointing relative to the resilience of the economy this year and limits the scope for any fiscal largesse going forwards.
8.20am GMT8.20am GMT
08:2008:20
Stock markets rally in early tradingStock markets rally in early trading
European stock markets have jumped at the start of trading, after the US market hit fresh record highs last night.European stock markets have jumped at the start of trading, after the US market hit fresh record highs last night.
In London the FTSE 100 index has risen by 50 points to 6828, up 0.75%. Mining stocks are leading, with Anglo American gaining 4.9% and BHP Billiton up 3.8%.In London the FTSE 100 index has risen by 50 points to 6828, up 0.75%. Mining stocks are leading, with Anglo American gaining 4.9% and BHP Billiton up 3.8%.
Germany’s DAX and France’s CAC indices are both up around 0.6%, as investors catch up with a strong rally on Wall Street on Monday that drove all four indices to record levels.Germany’s DAX and France’s CAC indices are both up around 0.6%, as investors catch up with a strong rally on Wall Street on Monday that drove all four indices to record levels.
All four of the main US stock market indices - S&P 500, Nasdaq, Dow Jones and Russell 2000 - hit new record highs today. #timestampAll four of the main US stock market indices - S&P 500, Nasdaq, Dow Jones and Russell 2000 - hit new record highs today. #timestamp
The prospect of a new splurge of US government spending is pushing shares higher, says FXTM Chief Market Strategist Hussein Sayed.The prospect of a new splurge of US government spending is pushing shares higher, says FXTM Chief Market Strategist Hussein Sayed.
There are clearly no signs of profit taking yet, with Donald Trump’s reflationary economic plans of cutting taxes, infrastructure spending and less regulations remain to be the number one reason fueling stocks’ gains.There are clearly no signs of profit taking yet, with Donald Trump’s reflationary economic plans of cutting taxes, infrastructure spending and less regulations remain to be the number one reason fueling stocks’ gains.
So much for those analysts who predicted a market crash if Trump became president.So much for those analysts who predicted a market crash if Trump became president.
Even the news that Trump is now moonlighting as Nigel Farage’s career advisor hasn’t ended the rally.....Even the news that Trump is now moonlighting as Nigel Farage’s career advisor hasn’t ended the rally.....
2️⃣ We regret to inform you that the president-elect of the US has been tweeting again https://t.co/LsxUfLwojl pic.twitter.com/trdT6sdqWh2️⃣ We regret to inform you that the president-elect of the US has been tweeting again https://t.co/LsxUfLwojl pic.twitter.com/trdT6sdqWh
PM's spokesman says there is no vacancy for an ambassador to U.S. after Donald Trump tweeted that UKIP's Nigel Farage "would do a great job"PM's spokesman says there is no vacancy for an ambassador to U.S. after Donald Trump tweeted that UKIP's Nigel Farage "would do a great job"
UpdatedUpdated
at 8.25am GMTat 8.25am GMT
7.56am GMT7.56am GMT
07:5607:56
The agenda: UK public finances in focusThe agenda: UK public finances in focus
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
With Britain’s autumn statement due tomorrow, investors will be particularly interested in today’s main event -- the UK public finances for October.With Britain’s autumn statement due tomorrow, investors will be particularly interested in today’s main event -- the UK public finances for October.
Economists predict that Britain had to borrow around £6bn to balance the books last month, down from £6.4bn in October 2015.Economists predict that Britain had to borrow around £6bn to balance the books last month, down from £6.4bn in October 2015.
Any reduction in the nation’s deficit is welcome, but this fall wouldn’t bring the public finances back into line, given disappointing figures earlier in the financial year.Any reduction in the nation’s deficit is welcome, but this fall wouldn’t bring the public finances back into line, given disappointing figures earlier in the financial year.
Since April, Britain has already borrowed £45.5bn -- just £2.3bn less than a year earlier.Since April, Britain has already borrowed £45.5bn -- just £2.3bn less than a year earlier.
That means there’s very little chance of hitting the old target of £55bn for the 2016-17 financial year, as this chart shows:That means there’s very little chance of hitting the old target of £55bn for the 2016-17 financial year, as this chart shows:
September’s public finances were a particular shocker, as Howard Archer of IHS Global Insight reminds us:September’s public finances were a particular shocker, as Howard Archer of IHS Global Insight reminds us:
The public finances worsened appreciably in September compared to a year earlier.The public finances worsened appreciably in September compared to a year earlier.
Specifically, Public Sector Net Borrowing excluding banks (PSNBex) amounted to £10.6 billion in September, which was up from a shortfall of £9.3 billion in September 2015.Specifically, Public Sector Net Borrowing excluding banks (PSNBex) amounted to £10.6 billion in September, which was up from a shortfall of £9.3 billion in September 2015.
While the economy has shown overall resilience following June’s Brexit vote, tax receipts have taken some hit. Indeed, corporation tax fell year-on-year in September.While the economy has shown overall resilience following June’s Brexit vote, tax receipts have taken some hit. Indeed, corporation tax fell year-on-year in September.
Chancellor Philip Hammond is already expected to tell MPs tomorrow that UK growth forecasts have been revised down, meaning Britain will borrow tens of billions of pounds more than expected over the next few years.Chancellor Philip Hammond is already expected to tell MPs tomorrow that UK growth forecasts have been revised down, meaning Britain will borrow tens of billions of pounds more than expected over the next few years.
Fiona Cincotta of City Index believes this bad news could easily drive up Britain’s borrowing costs in the financial markets.Fiona Cincotta of City Index believes this bad news could easily drive up Britain’s borrowing costs in the financial markets.
In order to shore up the economy the government is expected to increase its borrowing, with upward revisions to net borrowing figures ranging from £8 billion to an extra £18 billion for 2017-18, taking the total to somewhere in the region of £63.5 billion - £73.5 billion. Should this amount be added to gilt issuance it would represent a significant increase which we would then expect to increase the UK’s rate at which it borrows.In order to shore up the economy the government is expected to increase its borrowing, with upward revisions to net borrowing figures ranging from £8 billion to an extra £18 billion for 2017-18, taking the total to somewhere in the region of £63.5 billion - £73.5 billion. Should this amount be added to gilt issuance it would represent a significant increase which we would then expect to increase the UK’s rate at which it borrows.
Therefore, any significantly large increase in future borrowing tomorrow from Hammond in his Autumn Statement, is likely to send the yields higher.Therefore, any significantly large increase in future borrowing tomorrow from Hammond in his Autumn Statement, is likely to send the yields higher.
[yields rise when prices fall, and show the effective interest rate on a bond][yields rise when prices fall, and show the effective interest rate on a bond]
Also coming up....Also coming up....
The economics calendar is a little sparse, but we do get a new measure of eurozone consumer confidence and US home sales (both at 3pm GMT)The economics calendar is a little sparse, but we do get a new measure of eurozone consumer confidence and US home sales (both at 3pm GMT)
Economists will be digesting the news that Donald Trump will pull America out of the Trans-Pacific Partnership on his first day as president.Economists will be digesting the news that Donald Trump will pull America out of the Trans-Pacific Partnership on his first day as president.
That won’t calm fears that we’re heading into choppy waters of trade wars and protectionism.That won’t calm fears that we’re heading into choppy waters of trade wars and protectionism.
And in the City, food group Compass, retail chain Kingfisher, online electrical retailer AO World, pub chain Mitchells & Butler and bank note maker De La Rue are all reporting results.And in the City, food group Compass, retail chain Kingfisher, online electrical retailer AO World, pub chain Mitchells & Butler and bank note maker De La Rue are all reporting results.
UpdatedUpdated
at 8.30am GMTat 8.30am GMT