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| UK public finances see first July surplus since 2002 – business live | |
| (35 minutes later) | |
| 9.57am BST | |
| 09:57 | |
| This chart shows the monthly as well as the cumulative borrowing figures: | |
| And borrowing as a percentage of GDP: | |
| 9.44am BST | |
| 09:44 | |
| The receipts from self-assessed income tax, which increased by £0.8bn to £8.0bn compared with July 2016, represented the highest level of July self-assessed receipts on record (records began in 1999). | |
| Updated | |
| at 9.53am BST | |
| 9.34am BST | |
| 09:34 | |
| UK public finances show surplus | |
| BREAKING NEWS: | |
| Britain has seen the first July surplus since 2002, defying expectations of another deficit. | |
| The latest figures from the Office for National Statistics showed a surplus of £0.184bn compared with expectations the government would borrow around £1bn. That compares with a deficit of £0.308bn in July 2016. | |
| That means the total cumulative borrowing for the year so far is £22.8bn, up 9% on the same period last year. | |
| UK Public Finances: receipts from self-assessed Income Tax increased by £0.8 billion to £8.0 billion, compared with July 2016 | |
| Updated | |
| at 9.54am BST | |
| 9.04am BST | 9.04am BST |
| 09:04 | 09:04 |
| On BHP, analyst Nicholas Hyett at Hargreaves Lansdown said: | On BHP, analyst Nicholas Hyett at Hargreaves Lansdown said: |
| The headline news today is BHP’s decision to exit onshore oil & gas in the US. Coming after pressure from activist investor Elliott International to spin off the entire US oil & gas business, the move is likely to be seen as a capitulation by the board, which had previously argued that the division formed a core part of the group’s operations. | The headline news today is BHP’s decision to exit onshore oil & gas in the US. Coming after pressure from activist investor Elliott International to spin off the entire US oil & gas business, the move is likely to be seen as a capitulation by the board, which had previously argued that the division formed a core part of the group’s operations. |
| However while that volte face may attract headlines, management’s strategy elsewhere seems to be going smoothly and delivering results. | However while that volte face may attract headlines, management’s strategy elsewhere seems to be going smoothly and delivering results. |
| The focus on cost control at BHP’s already very low cost assets, means cash generation is soaring now commodity prices have turned. Net debt is tumbling, and as that falls towards more sustainable levels it will free up cash for other uses. | The focus on cost control at BHP’s already very low cost assets, means cash generation is soaring now commodity prices have turned. Net debt is tumbling, and as that falls towards more sustainable levels it will free up cash for other uses. |
| Next year a significant portion of the spare cash is going on increased capital spending, particularly in Petroleum and expanding existing mines. But since the group has already proven itself willing to return more than the 50% of earnings its dividend policy dictates, returns to shareholders could benefit as well. | Next year a significant portion of the spare cash is going on increased capital spending, particularly in Petroleum and expanding existing mines. But since the group has already proven itself willing to return more than the 50% of earnings its dividend policy dictates, returns to shareholders could benefit as well. |
| As ever though, that assumes stable commodity prices, and if the last two years have taught us anything it’s the risks of making that kind of assumption. | As ever though, that assumes stable commodity prices, and if the last two years have taught us anything it’s the risks of making that kind of assumption. |
| 8.58am BST | 8.58am BST |
| 08:58 | 08:58 |
| BHP boosted by US shale sale plans | BHP boosted by US shale sale plans |
| Back with the stock market, and BHP Billiton is a positive story for the day. | Back with the stock market, and BHP Billiton is a positive story for the day. |
| The mining group’s shares are up 3% after it reported a jump in profits from $1.2bn to $6.7bn and confirmed that it planned to dispose of its underperforming US shale oil and gas business after pressure from activist investors. | The mining group’s shares are up 3% after it reported a jump in profits from $1.2bn to $6.7bn and confirmed that it planned to dispose of its underperforming US shale oil and gas business after pressure from activist investors. |
| Updated | Updated |
| at 8.58am BST | at 8.58am BST |
| 8.52am BST | 8.52am BST |
| 08:52 | 08:52 |
| Sarah Butler | Sarah Butler |
| The latest grocery market share figures are out, and it is a moment to savour. Sarah Butler reports: | The latest grocery market share figures are out, and it is a moment to savour. Sarah Butler reports: |
| Lidl has overtaken Waitrose to become the UK’s seventh largest grocer as increasingly cash-strapped shoppers turn to the discounters. | Lidl has overtaken Waitrose to become the UK’s seventh largest grocer as increasingly cash-strapped shoppers turn to the discounters. |
| The German discount chain reached a new market share high of 5.2% as sales rose 18.9% in the 12 weeks to 13 August – making it the UK’s fastest-growing grocer, according to the latest market share data from analysts Kantar Worldpanel. | |
| Fellow discounter Aldi’s sales rose by 17.2% taking it to a 7% market share. Aldi overtook Waitrose in 2015. | Fellow discounter Aldi’s sales rose by 17.2% taking it to a 7% market share. Aldi overtook Waitrose in 2015. |
| The first British Lidl opened its doors in 1994 and it now has a chain of more than 650 stores after an ambitious expansion programme. Although Lidl has overtaken Waitrose, the upmarket grocer’s share of sales held steady at 5.1%. It managed to increase sales by 2.8% year on year, continuing an unbroken run of growth dating back to March 2009. | The first British Lidl opened its doors in 1994 and it now has a chain of more than 650 stores after an ambitious expansion programme. Although Lidl has overtaken Waitrose, the upmarket grocer’s share of sales held steady at 5.1%. It managed to increase sales by 2.8% year on year, continuing an unbroken run of growth dating back to March 2009. |
| The “big four” – Tesco, Sainsbury’s Asda and Morrisons – all increased sales for the fifth period in a row, their best performance since 2013, but nevertheless lost market share as the discounters grew much faster. | The “big four” – Tesco, Sainsbury’s Asda and Morrisons – all increased sales for the fifth period in a row, their best performance since 2013, but nevertheless lost market share as the discounters grew much faster. |
| The full story is here: | The full story is here: |
| Updated | |
| at 9.54am BST | |
| 8.47am BST | 8.47am BST |
| 08:47 | 08:47 |
| Provident Financial continues to slide, now down 60%. This means it has lost around £1.5bn so far today. | Provident Financial continues to slide, now down 60%. This means it has lost around £1.5bn so far today. |
| 8.36am BST | 8.36am BST |
| 08:36 | 08:36 |
| The pound continues to slip back, down 0.12% to a new eight-year low of €1.0903 against the euro. | The pound continues to slip back, down 0.12% to a new eight-year low of €1.0903 against the euro. |
| Against the dollar, sterling is 0.33% lower at ¢1.2856. Connor Campbell, financial analyst at Spreadex, said: | Against the dollar, sterling is 0.33% lower at ¢1.2856. Connor Campbell, financial analyst at Spreadex, said: |
| Sterling dipped against both the dollar and the euro after the bell...The currency could be helped out, however, by the July’s public sector net borrowing figures, which is expected to see a tax receipt-boosted improvement on June’s £6.9bn deficit. | Sterling dipped against both the dollar and the euro after the bell...The currency could be helped out, however, by the July’s public sector net borrowing figures, which is expected to see a tax receipt-boosted improvement on June’s £6.9bn deficit. |
| Updated | Updated |
| at 8.49am BST | at 8.49am BST |
| 8.28am BST | 8.28am BST |
| 08:28 | 08:28 |
| Provident Financial shares are now down 53%. Neil Wilson, senior market analyst at ETX Capital, said: | Provident Financial shares are now down 53%. Neil Wilson, senior market analyst at ETX Capital, said: |
| Hedge funds that built up short positions in Provident Financial made the right call after another, much bigger, warning has rattled investors and sunk the stock. Provident shares, already down 45% since May, tumbled another 43% on the open, on course for one of the biggest ever one-day falls for a FTSE 100 stock. | Hedge funds that built up short positions in Provident Financial made the right call after another, much bigger, warning has rattled investors and sunk the stock. Provident shares, already down 45% since May, tumbled another 43% on the open, on course for one of the biggest ever one-day falls for a FTSE 100 stock. |
| A catastrophic share price drop in a subprime lender – it’s like the last ten years never happened. Is this a Northern Rock moment? Probably not – this is more about management failings than a market-wide issue: rivals are taking market share. | A catastrophic share price drop in a subprime lender – it’s like the last ten years never happened. Is this a Northern Rock moment? Probably not – this is more about management failings than a market-wide issue: rivals are taking market share. |
| The new home credit model isn’t working and drastic action is required. CEO Peter Crook is out and a turnaround is underway already. The previously-announced dividend is being withdrawn and investors shouldn’t expect anything until we see significant improvements. The 5.5% dividend yield was really the last leg holding the stock up but this key support has now gone. | The new home credit model isn’t working and drastic action is required. CEO Peter Crook is out and a turnaround is underway already. The previously-announced dividend is being withdrawn and investors shouldn’t expect anything until we see significant improvements. The 5.5% dividend yield was really the last leg holding the stock up but this key support has now gone. |
| Provident seems to have run into some IT problems on top of the morale and recruitment issues relating to the restructuring. Execution risks remain and there is no easy way out from this hole. | Provident seems to have run into some IT problems on top of the morale and recruitment issues relating to the restructuring. Execution risks remain and there is no easy way out from this hole. |
| Management will take a long time to regain credibility. This comes just a couple of months after a profits warning off the back of the disruption of moving to the new operating model. It clearly wasn’t going well and, with profits warnings rarely standalone events, there is a touch of inevitably about this. | Management will take a long time to regain credibility. This comes just a couple of months after a profits warning off the back of the disruption of moving to the new operating model. It clearly wasn’t going well and, with profits warnings rarely standalone events, there is a touch of inevitably about this. |
| The performance is abysmal and significantly worse than management ever could have imagined. Collections are running at 57% compared with 90% in 2016, while sales are £9m per week lower than the comparative weeks in 2016. | The performance is abysmal and significantly worse than management ever could have imagined. Collections are running at 57% compared with 90% in 2016, while sales are £9m per week lower than the comparative weeks in 2016. |
| This blows another hole in the guidance and Provident is now forecasting a net loss of £80m-£120m. | This blows another hole in the guidance and Provident is now forecasting a net loss of £80m-£120m. |
| Is this the end? There must be some sense that things cannot get any worse. A review and turnaround is in process. Other areas of the business remain profitable with Vanquis Bank, Moneybarn and Satsuma all still in line with expectations. | Is this the end? There must be some sense that things cannot get any worse. A review and turnaround is in process. Other areas of the business remain profitable with Vanquis Bank, Moneybarn and Satsuma all still in line with expectations. |
| Updated | Updated |
| at 8.29am BST | at 8.29am BST |
| 8.15am BST | 8.15am BST |
| 08:15 | 08:15 |
| European markets open higher | European markets open higher |
| As expected, European investors are in a brighter mood. | As expected, European investors are in a brighter mood. |
| Despite the collapse in Provident Financial – now down 45% – the FTSE 100 is up 0.6%. Germany’s Dax has added 0.8%, France’s Cac has climbed 0.5% and Spain’s Ibex is up 0.7%. | Despite the collapse in Provident Financial – now down 45% – the FTSE 100 is up 0.6%. Germany’s Dax has added 0.8%, France’s Cac has climbed 0.5% and Spain’s Ibex is up 0.7%. |
| Updated | Updated |
| at 8.26am BST | at 8.26am BST |
| 8.06am BST | 8.06am BST |
| 08:06 | 08:06 |
| Unsurprisingly, Provident Financial shares have tanked, falling 44% in early trading. | Unsurprisingly, Provident Financial shares have tanked, falling 44% in early trading. |
| The company, which joined the FTSE 100 in December 2015, is the biggest loser in the leading index. | The company, which joined the FTSE 100 in December 2015, is the biggest loser in the leading index. |
| Updated | Updated |
| at 8.26am BST | at 8.26am BST |
| 7.56am BST | 7.56am BST |
| 07:56 | 07:56 |
| Provident Financial boss leaves after profit warning | Provident Financial boss leaves after profit warning |
| The chief executive of Provident Financial. Peter Crook, is leaving after the UK lender issued its second profit warning in two months and said it would not pay a dividend this year as well as cancelling a previously promised payout. | The chief executive of Provident Financial. Peter Crook, is leaving after the UK lender issued its second profit warning in two months and said it would not pay a dividend this year as well as cancelling a previously promised payout. |
| It also announced its Vanquis Bank was being investigated by the Financial Conduct Authority over its repayment option plan. It said: | It also announced its Vanquis Bank was being investigated by the Financial Conduct Authority over its repayment option plan. It said: |
| In view of the substantial deterioration in the trading performance of the home credit business, together with the uncertainty created by the FCA’s investigation at Vanquis Bank, the board has determined that the group must protect its capital base and financial flexibility by withdrawing the interim dividend declared on 25 July 2017 and indicate that a full year dividend is unlikely. | In view of the substantial deterioration in the trading performance of the home credit business, together with the uncertainty created by the FCA’s investigation at Vanquis Bank, the board has determined that the group must protect its capital base and financial flexibility by withdrawing the interim dividend declared on 25 July 2017 and indicate that a full year dividend is unlikely. |
| Reuters reports: | Reuters reports: |
| The company has been struggling to reorganise its door-to-door subprime lending business, warning in June that its profit would fall as it struggles to switch from using self-employed debt collection agents to employees on its payroll. | The company has been struggling to reorganise its door-to-door subprime lending business, warning in June that its profit would fall as it struggles to switch from using self-employed debt collection agents to employees on its payroll. |
| Provident Financial, which provides credit to people who do not meet the loan criteria of mainstream banks, billed the reorganisation as a way to create a more efficient and effective home credit business. But it has found it harder than expected to recruit agents. | Provident Financial, which provides credit to people who do not meet the loan criteria of mainstream banks, billed the reorganisation as a way to create a more efficient and effective home credit business. But it has found it harder than expected to recruit agents. |
| The firm said on Tuesday the rate of progress being made in the turnaround of the home credit unit is “too weak” and that the business is now falling a long way short of achieving the objectives set out. | The firm said on Tuesday the rate of progress being made in the turnaround of the home credit unit is “too weak” and that the business is now falling a long way short of achieving the objectives set out. |
| Collections performance and sales are both substantially underperforming against last year, Provident Financial said, adding that the pre-exceptional loss for the business is now likely to be in a range of £80m to £120m. | Collections performance and sales are both substantially underperforming against last year, Provident Financial said, adding that the pre-exceptional loss for the business is now likely to be in a range of £80m to £120m. |
| “In response, a thorough and rapid review of home credit’s performance is underway to secure the turnaround of the business,” the company said. | “In response, a thorough and rapid review of home credit’s performance is underway to secure the turnaround of the business,” the company said. |
| Manjit Wolstenholme will assume the role of executive chairman as Crook departs. | Manjit Wolstenholme will assume the role of executive chairman as Crook departs. |
| Analyst Peter Lenardos at RBC Europe said: | Analyst Peter Lenardos at RBC Europe said: |
| While Provident is down nearly 40% year-to-date, we expect ongoing substantial losses in the share price, and would not be buyers at any price. While the share correction was making us warm to Provident, this quadruple whammy (another profit warning, no dividend, FCA investigation and CEO departure) lead us to now believe that the shares are not investible until greater clarity is received, which may not be until next year at the earliest. | While Provident is down nearly 40% year-to-date, we expect ongoing substantial losses in the share price, and would not be buyers at any price. While the share correction was making us warm to Provident, this quadruple whammy (another profit warning, no dividend, FCA investigation and CEO departure) lead us to now believe that the shares are not investible until greater clarity is received, which may not be until next year at the earliest. |
| Numis said: | Numis said: |
| The FCA is also investigating the group’s ROP product (Provident’s version of PPI) and should they have to repay all of the premiums as the banks have done it could question the viability of the group. | The FCA is also investigating the group’s ROP product (Provident’s version of PPI) and should they have to repay all of the premiums as the banks have done it could question the viability of the group. |
| Updated | Updated |
| at 8.27am BST | at 8.27am BST |
| 7.41am BST | 7.41am BST |
| 07:41 | 07:41 |
| Persimmon shrugs off Brexit concerns | Persimmon shrugs off Brexit concerns |
| Not much in the way of corporate news, but we do have figures from the UK housebuilder Persimmon. My colleague Julia Kollewe reports: | Not much in the way of corporate news, but we do have figures from the UK housebuilder Persimmon. My colleague Julia Kollewe reports: |
| Persimmon, one of Britain’s biggest housebuilders, says it has fared better than expected since last year’s Brexit vote, and is looking forward to a good autumn sales season. It posted a 30% rise in profit before tax to £457.4m in the first six months of the year. | Persimmon, one of Britain’s biggest housebuilders, says it has fared better than expected since last year’s Brexit vote, and is looking forward to a good autumn sales season. It posted a 30% rise in profit before tax to £457.4m in the first six months of the year. |
| The company built 556 more homes than in the same period last year – a total of 7,794 homes, up 8% – and raised its average selling price by 4% to £213,262. The sales price for its upmarket Charles Church brand rose by 9.4% to £347,819. | The company built 556 more homes than in the same period last year – a total of 7,794 homes, up 8% – and raised its average selling price by 4% to £213,262. The sales price for its upmarket Charles Church brand rose by 9.4% to £347,819. |
| Chief executive Jeff Fairburn said: | Chief executive Jeff Fairburn said: |
| Through the second half of 2016, the group experienced stronger market conditions than expected post the EU referendum on 23 June 2016, particularly through the traditionally slower summer weeks. Against these stronger comparatives, customer interest over the last seven weeks from 1 July has remained robust and our average weekly private sales rate per site was 2% ahead of the same period last year. | Through the second half of 2016, the group experienced stronger market conditions than expected post the EU referendum on 23 June 2016, particularly through the traditionally slower summer weeks. Against these stronger comparatives, customer interest over the last seven weeks from 1 July has remained robust and our average weekly private sales rate per site was 2% ahead of the same period last year. |
| Analyst Anthony Codling at Jefferies said: | Analyst Anthony Codling at Jefferies said: |
| A very strong, sector-leading performance from Persimmon in the first half, delivering operating margin growth of 380 basis points to 27.6%. In our view, Help to Buy is acting as a bulletproof vest for the new-build sector allowing it to ride above the challenges faced by the secondhand market, with Persimmon continuing to balance the markets appetite more new homes with investors’ desires for higher cash returns. | A very strong, sector-leading performance from Persimmon in the first half, delivering operating margin growth of 380 basis points to 27.6%. In our view, Help to Buy is acting as a bulletproof vest for the new-build sector allowing it to ride above the challenges faced by the secondhand market, with Persimmon continuing to balance the markets appetite more new homes with investors’ desires for higher cash returns. |
| Updated | Updated |
| at 8.01am BST | at 8.01am BST |
| 7.38am BST | 7.38am BST |
| 07:38 | 07:38 |
| European markets set to open higher | European markets set to open higher |
| After a pretty gloomy day for European markets on Monday - in keeping with the weather - the prospects for today are looking a little brighter. | After a pretty gloomy day for European markets on Monday - in keeping with the weather - the prospects for today are looking a little brighter. |
| A slight recovery on Wall Street - helped by further weakness in the dollar - has given a bit of a lift to sentiment. In Asia the Hang Seng has climbed 1% although the Nikkei is virtually unchanged, down 0.05%. Europe is expected to adopt the positive trend: | A slight recovery on Wall Street - helped by further weakness in the dollar - has given a bit of a lift to sentiment. In Asia the Hang Seng has climbed 1% although the Nikkei is virtually unchanged, down 0.05%. Europe is expected to adopt the positive trend: |
| Our European opening calls:$FTSE 7346 up 27$DAX 12101 up 35$CAC 5098 up 11$IBEX 10384 up 24$MIB 21772 up 19 | Our European opening calls:$FTSE 7346 up 27$DAX 12101 up 35$CAC 5098 up 11$IBEX 10384 up 24$MIB 21772 up 19 |
| But the concerns troubling investors have not gone away. Tensions between the US and North Korea have not gone away, the turmoil at the White House continues, and there is also nervousness ahead of the Jackson Hole meeting of central bankers later in the week. | But the concerns troubling investors have not gone away. Tensions between the US and North Korea have not gone away, the turmoil at the White House continues, and there is also nervousness ahead of the Jackson Hole meeting of central bankers later in the week. |
| Updated | Updated |
| at 8.22am BST | at 8.22am BST |
| 7.31am BST | 7.31am BST |
| 07:31 | 07:31 |
| Agenda: UK public finances and German confidence figures due | Agenda: UK public finances and German confidence figures due |
| 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. |
| A slightly busier day today after a relatively quiet Monday, with UK public finances the main focus. The July figure is expected to show an improvement on the previous month’s number, which showed the government borrowing a higher-than-expected £6.9bn. Helped by tax receipts, last month’s rise in borrowing is expected to be just £1bn. Economists at RBC said: | A slightly busier day today after a relatively quiet Monday, with UK public finances the main focus. The July figure is expected to show an improvement on the previous month’s number, which showed the government borrowing a higher-than-expected £6.9bn. Helped by tax receipts, last month’s rise in borrowing is expected to be just £1bn. Economists at RBC said: |
| July is a seasonally strong month for government tax receipts as corporation tax instalments are paid as well as a second wave of self-assessment liabilities being settled by individuals. | July is a seasonally strong month for government tax receipts as corporation tax instalments are paid as well as a second wave of self-assessment liabilities being settled by individuals. |
| Therefore, the cumulative deficit for 2017-18 is only expected to expand by £1bn (PSNB ex banking groups measure) to a total of just over £27bn. The full-year target for the deficit is £58.3bn. Revisions to the target are likely in the Budget later in the year. | Therefore, the cumulative deficit for 2017-18 is only expected to expand by £1bn (PSNB ex banking groups measure) to a total of just over £27bn. The full-year target for the deficit is £58.3bn. Revisions to the target are likely in the Budget later in the year. |
| Paul Hollingsworth at Capital Economics said: | Paul Hollingsworth at Capital Economics said: |
| The public finance figures should show that borrowing fell a little on the year in July... Although the economy slowed in the first quarter, corporate profitability has remained strong. | The public finance figures should show that borrowing fell a little on the year in July... Although the economy slowed in the first quarter, corporate profitability has remained strong. |
| Later come the CBI industrial trends survey and the latest German confidence figures, which are expected to show a fall from 17.5 to around 14.8. | Later come the CBI industrial trends survey and the latest German confidence figures, which are expected to show a fall from 17.5 to around 14.8. |
| On the CBI figures, Michael Hewson of CMC Markets said: | On the CBI figures, Michael Hewson of CMC Markets said: |
| An extremely positive number in July boosted confidence in the manufacturing sector, and showed output growing at its fastest rate since the mid 1990s. August is expected to show a slight slowdown to 8 from 10 in July, but nonetheless is expected to largely sustain the positive trend seen a month ago.. | An extremely positive number in July boosted confidence in the manufacturing sector, and showed output growing at its fastest rate since the mid 1990s. August is expected to show a slight slowdown to 8 from 10 in July, but nonetheless is expected to largely sustain the positive trend seen a month ago.. |
| The agenda: | The agenda: |
| 9.30 BST UK public finances (July) | 9.30 BST UK public finances (July) |
| 10.00 BST German ZEW confidence survey (August) | 10.00 BST German ZEW confidence survey (August) |
| 11.00 BST CBI industrial trends (August) | 11.00 BST CBI industrial trends (August) |
| Updated | Updated |
| at 7.59am BST | at 7.59am BST |