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| UK public finances see first July surplus since 2002 – business live | UK public finances see first July surplus since 2002 – business live |
| (35 minutes later) | |
| 1.29pm BST | 1.29pm BST |
| 13:29 | 13:29 |
| Larry Elliott | Larry Elliott |
| Despite the surprise surplus in July, the UK’s public finances will take time to sort out, says Larry Elliott: | Despite the surprise surplus in July, the UK’s public finances will take time to sort out, says Larry Elliott: |
| The government was in the happy – and unusual – position of being in the black in July. To the surprise of the City, tax receipts were higher than public spending. Not by much, but a surplus is still a surplus even if in the context of a £1.8tn economy it is small change. | |
| This, though, was a classic case of one swallow not making a summer. For a start, the deficit in the first four months of the financial year – a much better guide to the trend than a single month’s figures – was higher this year than last. | This, though, was a classic case of one swallow not making a summer. For a start, the deficit in the first four months of the financial year – a much better guide to the trend than a single month’s figures – was higher this year than last. |
| Moreover, despite strong growth in employment, PAYE receipts last month were only 1.6% higher than in July 2016. That is entirely consistent with an economy where workers struggling to secure a decent pay rise are not paying very much tax. | Moreover, despite strong growth in employment, PAYE receipts last month were only 1.6% higher than in July 2016. That is entirely consistent with an economy where workers struggling to secure a decent pay rise are not paying very much tax. |
| The first July surplus since 2002 was an improvement on a small £400m deficit in July 2016 but close examination of the Office for National Statistics data suggests that was the result of an £800m jump in receipts from self-employment. | The first July surplus since 2002 was an improvement on a small £400m deficit in July 2016 but close examination of the Office for National Statistics data suggests that was the result of an £800m jump in receipts from self-employment. |
| But as a number of analysts pointed out, in 2016 the deadline for the self-employed fell on a weekend, with the result that many payments were not processed until August. To judge whether there has been any real improvement in self-employment receipts we will have to wait for the August data to come out. | But as a number of analysts pointed out, in 2016 the deadline for the self-employed fell on a weekend, with the result that many payments were not processed until August. To judge whether there has been any real improvement in self-employment receipts we will have to wait for the August data to come out. |
| Larry’s full analysis is here: | Larry’s full analysis is here: |
| Updated | Updated |
| at 1.41pm BST | |
| 1.09pm BST | 1.09pm BST |
| 13:09 | 13:09 |
| £ at nearly €0.92. We're one hawkish ECB message and one rubbish bit of UK econ data away from a new record low in trade weighted sterling. | £ at nearly €0.92. We're one hawkish ECB message and one rubbish bit of UK econ data away from a new record low in trade weighted sterling. |
| 12.09pm BST | 12.09pm BST |
| 12:09 | 12:09 |
| Here’s Lord Macpherson – who on Monday described QE as “like heroin” – on the public finances: | |
| Good to see budget in surplus if only for one month. But 23% rise in debt interest bill in year to date a reminder UK not out of woods. | Good to see budget in surplus if only for one month. But 23% rise in debt interest bill in year to date a reminder UK not out of woods. |
| Updated | |
| at 1.42pm BST | |
| 12.03pm BST | 12.03pm BST |
| 12:03 | 12:03 |
| Brexit concerns are outweighing the positive public finance figures as far as the pound is concerned, says Connor Campbell, financial analyst at Spreadex: | Brexit concerns are outweighing the positive public finance figures as far as the pound is concerned, says Connor Campbell, financial analyst at Spreadex: |
| The first July surplus meant little to the pound this Tuesday, which wilted in the face of a resurgent dollar. | The first July surplus meant little to the pound this Tuesday, which wilted in the face of a resurgent dollar. |
| With little news on the key US fronts – North Korea, the status of economic advisor Gary Cohn – the greenback saw no reason to not to rebound, climbing half a percent against both the pound and the euro. | With little news on the key US fronts – North Korea, the status of economic advisor Gary Cohn – the greenback saw no reason to not to rebound, climbing half a percent against both the pound and the euro. |
| It wasn’t all due to dollar strength, however. Sterling suffered from a renewal of the semi-persistent Brexit fears, while the euro was hurt not only by a weaker than forecast pair of German and Eurozone ZEW economic sentiment readings but further doubt that Mario Draghi will say anything to boost the currency at the Jackson Hole Symposium on Friday. | It wasn’t all due to dollar strength, however. Sterling suffered from a renewal of the semi-persistent Brexit fears, while the euro was hurt not only by a weaker than forecast pair of German and Eurozone ZEW economic sentiment readings but further doubt that Mario Draghi will say anything to boost the currency at the Jackson Hole Symposium on Friday. |
| The eurozone ZEW economic sentiment survey showed a fall from 35.6 to 29.3 in August. | The eurozone ZEW economic sentiment survey showed a fall from 35.6 to 29.3 in August. |
| 11.45am BST | 11.45am BST |
| 11:45 | 11:45 |
| Back with the UK public finances, and Howard Archer, chief economic advisor to the EY Item Club, says they could give chancellor Philip Hammond some leeaway in his forthcoming budget : | Back with the UK public finances, and Howard Archer, chief economic advisor to the EY Item Club, says they could give chancellor Philip Hammond some leeaway in his forthcoming budget : |
| A welcome summer break for the chancellor as the public finances saw the first July surplus since 2002. | A welcome summer break for the chancellor as the public finances saw the first July surplus since 2002. |
| Specifically, there was a marginal repayment of £184m on public sector net borrowing excluding public sector banks (PSNBex) in July. This compared to a shortfall of £308m in July 2016. | Specifically, there was a marginal repayment of £184m on public sector net borrowing excluding public sector banks (PSNBex) in July. This compared to a shortfall of £308m in July 2016. |
| June’s shortfall was also revised down to £6.2bn from a previously reported £6.9bn. Even so, June’s shortfall was up markedly from £4.8bn a year earlier - partly due to a major payment to the EU budget as well as higher debt interest payments. | June’s shortfall was also revised down to £6.2bn from a previously reported £6.9bn. Even so, June’s shortfall was up markedly from £4.8bn a year earlier - partly due to a major payment to the EU budget as well as higher debt interest payments. |
| Completing a hat-trick of good news, the 2016/17 budget shortfall was trimmed again to £45.1bn from £46.2bn. | Completing a hat-trick of good news, the 2016/17 budget shortfall was trimmed again to £45.1bn from £46.2bn. |
| The public finances particularly benefited in July from a 10.6% year-on-year (y/y) rise in self-assessed income tax receipts, which ties in with the resilience of the labour market... | The public finances particularly benefited in July from a 10.6% year-on-year (y/y) rise in self-assessed income tax receipts, which ties in with the resilience of the labour market... |
| If the pattern of the first four months were repeated over the full fiscal year, 2017/18 public borrowing would come in at £49.2bn. This would be well below the shortfall of £58.3bn forecast by the ONS in March’s Budget. | If the pattern of the first four months were repeated over the full fiscal year, 2017/18 public borrowing would come in at £49.2bn. This would be well below the shortfall of £58.3bn forecast by the ONS in March’s Budget. |
| While a struggling economy and higher interest debt payments look likely to weigh down on the public finances over the coming months, there’s a good chance that the chancellor will have a little wiggle room in November’s Budget. | While a struggling economy and higher interest debt payments look likely to weigh down on the public finances over the coming months, there’s a good chance that the chancellor will have a little wiggle room in November’s Budget. |
| Rising dissatisfaction with austerity and the public sector pay cap is exerting pressure on the government to recalibrate fiscal policy in November’s Budget. However, it currently seems most likely that there will be limited adjustments to the fiscal approach rather than radical policy changes. | Rising dissatisfaction with austerity and the public sector pay cap is exerting pressure on the government to recalibrate fiscal policy in November’s Budget. However, it currently seems most likely that there will be limited adjustments to the fiscal approach rather than radical policy changes. |
| While the chancellor has indicated that he has taken on board the views of the electorate, he has stated that he remains committed to the fiscal rules set out at the Autumn Statement which lead to a balanced budget by mid-2020’s. | While the chancellor has indicated that he has taken on board the views of the electorate, he has stated that he remains committed to the fiscal rules set out at the Autumn Statement which lead to a balanced budget by mid-2020’s. |
| 11.36am BST | 11.36am BST |
| 11:36 | 11:36 |
| More on the pound. Fawad Razaqzada, technical analyst at Forex.com, said: | More on the pound. Fawad Razaqzada, technical analyst at Forex.com, said: |
| Sentiment towards the British pound remains negative and so if the dollar were to stage a more meaningful comeback then the GBP/USD would be the one to watch as it could drop heavily. | Sentiment towards the British pound remains negative and so if the dollar were to stage a more meaningful comeback then the GBP/USD would be the one to watch as it could drop heavily. |
| The pound is currently down 0.6% at $1.2824. | The pound is currently down 0.6% at $1.2824. |
| GBPUSD at a 40 day low after breaking below recent range. Approaching the key 1.2811 support level pic.twitter.com/5arquSepQV | GBPUSD at a 40 day low after breaking below recent range. Approaching the key 1.2811 support level pic.twitter.com/5arquSepQV |
| Updated | Updated |
| at 11.48am BST | at 11.48am BST |
| 11.29am BST | 11.29am BST |
| 11:29 | 11:29 |
| UK manufacturers report strong demand | UK manufacturers report strong demand |
| Manufacturers expect strong growth in the next three months after a pick up in orders in August, according to the CBI’s latest industrial trends survey. | Manufacturers expect strong growth in the next three months after a pick up in orders in August, according to the CBI’s latest industrial trends survey. |
| The survey showed 30% of manufacturers reported order books above normal, with 17% saying they were below normal. The balance of +13% was higher than the +10% level seen in July and above the long run average of -14%. | The survey showed 30% of manufacturers reported order books above normal, with 17% saying they were below normal. The balance of +13% was higher than the +10% level seen in July and above the long run average of -14%. |
| As for exports, 22% of firms said they were above normal and 10% below. | As for exports, 22% of firms said they were above normal and 10% below. |
| Output growth remained strong and broad based and is expected to remain so over the next quarter. #CBI_ITS https://t.co/m53aToSWoQ pic.twitter.com/hb5GrDjw3f | Output growth remained strong and broad based and is expected to remain so over the next quarter. #CBI_ITS https://t.co/m53aToSWoQ pic.twitter.com/hb5GrDjw3f |
| Anna Leach, CBI Head of Economic Intelligence, said: | Anna Leach, CBI Head of Economic Intelligence, said: |
| There are further signs that exporters are feeling the benefit from the lower pound in this month’s figures, and output growth is expected to power on over the coming quarter. | There are further signs that exporters are feeling the benefit from the lower pound in this month’s figures, and output growth is expected to power on over the coming quarter. |
| But she added: | But she added: |
| After a brief pause last month, expectations for selling prices have rebounded, indicating that the squeeze on consumers is set to persist. We expect CPI (Consumer Price Index) to top out at around 3% towards the end of this year and remain close to that level during 2018, as the effect of the weak pound continues to feed through. | After a brief pause last month, expectations for selling prices have rebounded, indicating that the squeeze on consumers is set to persist. We expect CPI (Consumer Price Index) to top out at around 3% towards the end of this year and remain close to that level during 2018, as the effect of the weak pound continues to feed through. |
| Updated | Updated |
| at 11.31am BST | at 11.31am BST |
| 11.15am BST | 11.15am BST |
| 11:15 | 11:15 |
| Richard Partington | Richard Partington |
| Here’s our story on the UK public finances. Richard Partington writes: | Here’s our story on the UK public finances. Richard Partington writes: |
| The government ran the first July budget surplus in more than a decade last month, as Britain’s public finances recorded an unexpected leap back into the black with help from an increase in self-assessed tax payments. | The government ran the first July budget surplus in more than a decade last month, as Britain’s public finances recorded an unexpected leap back into the black with help from an increase in self-assessed tax payments. |
| Public sector net borrowing last month, excluding the nationalised banks, was in surplus by £184m, the first surplus in that month since 2002, the Office for National Statistics (ONS) said on Tuesday. City economists had expected the government to record a £1bn deficit. | Public sector net borrowing last month, excluding the nationalised banks, was in surplus by £184m, the first surplus in that month since 2002, the Office for National Statistics (ONS) said on Tuesday. City economists had expected the government to record a £1bn deficit. |
| Receipts from self-assessed income tax increased by £800m to £8bn last month, compared with July 2016, giving the government the highest level of July self-assessed tax receipts since it started recording these payments in 1999. | Receipts from self-assessed income tax increased by £800m to £8bn last month, compared with July 2016, giving the government the highest level of July self-assessed tax receipts since it started recording these payments in 1999. |
| Howard Archer, chief economic adviser at EY Item Club, said the figures were a welcome boost for the chancellor, Philip Hammond, who now had a “very decent chance” of undershooting his 2017-18 fiscal target. | Howard Archer, chief economic adviser at EY Item Club, said the figures were a welcome boost for the chancellor, Philip Hammond, who now had a “very decent chance” of undershooting his 2017-18 fiscal target. |
| The full story is here: | The full story is here: |
| 10.59am BST | 10.59am BST |
| 10:59 | 10:59 |
| Pensions regulator to prosecute Dominic Chappell over BHS | Pensions regulator to prosecute Dominic Chappell over BHS |
| BREAKING: | BREAKING: |
| The Pensions Regulator has announced it will prosecute Dominic Chappell over its investigation into BHS. The full statement from the regulator reads: | The Pensions Regulator has announced it will prosecute Dominic Chappell over its investigation into BHS. The full statement from the regulator reads: |
| The Pensions Regulator (TPR) is to prosecute Dominic Chappell for failing to provide information and documents it requested during its investigation into the sale of BHS. | The Pensions Regulator (TPR) is to prosecute Dominic Chappell for failing to provide information and documents it requested during its investigation into the sale of BHS. |
| Mr Chappell was the director and majority shareholder of Retail Acquisitions Ltd at the time that the company purchased BHS. | Mr Chappell was the director and majority shareholder of Retail Acquisitions Ltd at the time that the company purchased BHS. |
| TPR is prosecuting Mr Chappell for failing to comply with three notices issued under Section 72 of the Pensions Act 2004. The notices requiring information were issued to Mr Chappell on 26 April 2016, 13 May 2016 and 20 February 2017. | TPR is prosecuting Mr Chappell for failing to comply with three notices issued under Section 72 of the Pensions Act 2004. The notices requiring information were issued to Mr Chappell on 26 April 2016, 13 May 2016 and 20 February 2017. |
| He has been summonsed to appear at Brighton Magistrates’ Court on 20 September 2017 to face three charges of neglecting or refusing to provide information and documents, without a reasonable excuse, when required to do so under section 72 of the Pensions Act 2004, contrary to section 77(1) of that Act. | He has been summonsed to appear at Brighton Magistrates’ Court on 20 September 2017 to face three charges of neglecting or refusing to provide information and documents, without a reasonable excuse, when required to do so under section 72 of the Pensions Act 2004, contrary to section 77(1) of that Act. |
| Earlier this year the regulator started legal action to try and force Chappell to pay as much as £17m into the failed retailer’s pension scheme. | Earlier this year the regulator started legal action to try and force Chappell to pay as much as £17m into the failed retailer’s pension scheme. |
| Updated | Updated |
| at 11.02am BST | at 11.02am BST |
| 10.37am BST | 10.37am BST |
| 10:37 | 10:37 |
| Here’s Bloomberg’s graphic on the day’s fall in the pound so far: | Here’s Bloomberg’s graphic on the day’s fall in the pound so far: |
| Pound declines as uncertainties linger about post-#Brexit trade https://t.co/e6Pt8nTRUR via @anoojad pic.twitter.com/7r3lALLDzs | Pound declines as uncertainties linger about post-#Brexit trade https://t.co/e6Pt8nTRUR via @anoojad pic.twitter.com/7r3lALLDzs |
| 10.36am BST | 10.36am BST |
| 10:36 | 10:36 |
| UK's full year borrowing revised lower | UK's full year borrowing revised lower |
| The UK’s net borrowing for the year to March 2017 has been revised lower again, the latest ONS figures show. | The UK’s net borrowing for the year to March 2017 has been revised lower again, the latest ONS figures show. |
| It decreased by £27bn to £45.1bn compared with the previous financial year, the lowest level of borrowing since the year to March 2008. | It decreased by £27bn to £45.1bn compared with the previous financial year, the lowest level of borrowing since the year to March 2008. |
| In May the ONS said the figure for the year to March 207 was £48.7bn. | In May the ONS said the figure for the year to March 207 was £48.7bn. |