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Business live blog: UK government borrowing falls Business live blog: UK government borrowing falls
(35 minutes later)
11.28am BST11:28
Jennifer Rankin
In Brussels, our reporter Jennifer Rankin has been considering the political challenges that lie ahead as Greece hopes to kickstart talks on a new bailout package. She writes:
The Greek debt crisis is no longer on the front pages, but plenty of work goes on as Greek authorities race to meet the conditions laid down by their eurozone creditors to secure a new bailout.
On Wednesday the Greek parliament will vote on two new laws - on banking reform and changes to Greece’s civil code. These are among the final hurdles Greece has to clear before embarking on talks aimed at securing a proposed €86bn (£60bn) bailout.
The Greek government submitted legislation this morning to parliament, according to Kathimerini, ahead of a vote that will be a test for the weakened Syriza government, damaged by a series of rebellions and resignations over the latest deal with Greece’s creditors.
The prime minister, Alexis Tsipras, is expected to rely on the support of three opposition parties to get the measures through. In a vote over the first package of reforms Tsipras lost the majority support of his ruling Syriza coalition, as 40 lawmakers on his side either voted against the plan, abstained, or didn’t turn up to vote.
That pattern is expected to be repeated in Wednesday’s make-or-break vote, when parliament will vote on the two new laws.
The first is adopting a new code of civil procedure, with the aim of speeding up court processes and reducing costs. Greece’s current code of civil procedure has been little amended since it was introduced in 1967 and the country’s international creditors have been pressing for change.
Some civil and commercial disputes can take two or three years to come to court and there are few options for out-of-court settlements. The new code, which reduces the number of special procedures and replaces paperwork with electronic methods, was meant to be adopted in May 2014.
The next task mandated by the eurozone is to put the EU’s post-crisis banking rules into Greek national law. The EU’s bank recovery and resolution directive aims to ensure creditors and shareholders, rather than taxpayers, bear the losses of any future bank failure, but has not yet been turned into domestic law in Greece.
Greece was one of 12 EU member states that missed the December 2014 deadline to write the directive into national law. Other eurozone offenders include France, Italy, the Netherlands and Lithuania. The European commission - the guardian of EU law - has called on all countries to write the rules into their national law, or risk a fine, but none will have to act as quickly as Greece.
11.18am BST11:18
Sticking with Greece, there has been a spike in the number of Greek workers searching for jobs in the UK, according to one jobs site, something that will come as no surprise perhaps to many of our readers there.
With the Greek economy back in recession and expected to have taken a significant hit from the recent turmoil and the ongoing capital controls, last week alone CV-Library recorded a 111% jump on a year ago in the number of web visits received from Greek workers.
It also says its web traffic figures point to 55.9% more Greek traffic in the last month, compared to previous month. At the same time it has seen an overall decline in traffic from other European countries throughout June/July 2015, including Poland, France and Portugal.
Historical data from the job site suggests that web traffic from Greece is normally flat and steady, with a normal decline over the summer months, which is typical within the recruitment sector.
The latest figures put Greek unemployment at more than 25%, the highest in the EU.
10.49am BST10:4910.49am BST10:49
Greek government submits bill to parliament as step towards new bailout talksGreek government submits bill to parliament as step towards new bailout talks
Sticking with austerity drives, but turning to Greece, in Athens today the government has submitted legislation to parliament that has been demanded by the country’s creditors in order to get talks on a new bailout package underway.Sticking with austerity drives, but turning to Greece, in Athens today the government has submitted legislation to parliament that has been demanded by the country’s creditors in order to get talks on a new bailout package underway.
Reuters reports from Athens:Reuters reports from Athens:
Prime Minister Alexis Tsipras has until Wednesday night to get the measures adopted in the assembly. A first set of reforms triggered a rebellion in his party last week and passed only thanks to votes from pro-EU opposition parties.Prime Minister Alexis Tsipras has until Wednesday night to get the measures adopted in the assembly. A first set of reforms triggered a rebellion in his party last week and passed only thanks to votes from pro-EU opposition parties.
The second bill, though less divisive, will still be a test of his weakened majority.The second bill, though less divisive, will still be a test of his weakened majority.
It puts into Greek law new European Union rules on propping up failed banks, decreed after the 2008 financial crisis and aimed at shielding taxpayers from the risk of having to bail out troubled lenders.It puts into Greek law new European Union rules on propping up failed banks, decreed after the 2008 financial crisis and aimed at shielding taxpayers from the risk of having to bail out troubled lenders.
The so-called bank recovery and resolution directive (BRRD) imposes losses on shareholders and creditors of ailing lenders, in a process known as “bail-in”, before any taxpayers’ money can be tapped in a bank rescue.The so-called bank recovery and resolution directive (BRRD) imposes losses on shareholders and creditors of ailing lenders, in a process known as “bail-in”, before any taxpayers’ money can be tapped in a bank rescue.
The full story is here.The full story is here.
10.39am BST10:3910.39am BST10:39
Business lobby group, the British Chambers of Commerce, says despite progress in cutting the UK deficit, “major challenges” remain for the government.Business lobby group, the British Chambers of Commerce, says despite progress in cutting the UK deficit, “major challenges” remain for the government.
Its chief economist David Kern says:Its chief economist David Kern says:
“We must not understate the big challenges that the UK faces in restoring stability to our public finances. Britain’s financial sector was hit hard in the recession and, together with lower oil and gas output, our ability to generate tax revenues has been seriously constrained. Therefore, we have to continue to focus on other means to tackle the deficit - including cutting current government spending.“We must not understate the big challenges that the UK faces in restoring stability to our public finances. Britain’s financial sector was hit hard in the recession and, together with lower oil and gas output, our ability to generate tax revenues has been seriously constrained. Therefore, we have to continue to focus on other means to tackle the deficit - including cutting current government spending.
“The government must also put more emphasis on policies that will boost economic growth, most obviously infrastructure investment and supporting exports. Only by doing this will the UK be able to create an enterprising economy which can deliver sustained growth over the long-term.”“The government must also put more emphasis on policies that will boost economic growth, most obviously infrastructure investment and supporting exports. Only by doing this will the UK be able to create an enterprising economy which can deliver sustained growth over the long-term.”
10.30am BST10:3010.30am BST10:30
Reactions are coming in from economists to those public finance figures, which showed another improvement with borrowing down, but not by as much as the City had forecast. Experts highlight signs an improving economic backdrop is starting to come through in the government’s finances. While it is not quite the picture the government’s fiscal watchdog, the Office for Budget Responsibility (OBR), had pencilled in, they see little reason for alarm, yet.Reactions are coming in from economists to those public finance figures, which showed another improvement with borrowing down, but not by as much as the City had forecast. Experts highlight signs an improving economic backdrop is starting to come through in the government’s finances. While it is not quite the picture the government’s fiscal watchdog, the Office for Budget Responsibility (OBR), had pencilled in, they see little reason for alarm, yet.
Howard Archer, economist at IHS Global Insight says George Osborne will probably be pleased to see the shortfall on the public finances narrow for a sixth month running.Howard Archer, economist at IHS Global Insight says George Osborne will probably be pleased to see the shortfall on the public finances narrow for a sixth month running.
Improved income tax receipts continue to underpin the improvement in the public finances, reflecting a pick-up in earnings growth as well as higher employment. However, June’s increase of 2.5% year-on-year in income tax related payments was less than the recent increases.Improved income tax receipts continue to underpin the improvement in the public finances, reflecting a pick-up in earnings growth as well as higher employment. However, June’s increase of 2.5% year-on-year in income tax related payments was less than the recent increases.
There was a particularly marked rise in Value Added Tax receipts in June reflecting the recent strength of retail sales. Additionally, corporation tax receipts were up13.9% year-on-year in June...There was a particularly marked rise in Value Added Tax receipts in June reflecting the recent strength of retail sales. Additionally, corporation tax receipts were up13.9% year-on-year in June...
With June’s improvement being less than expected, the chancellor is now slightly off track to meet the reduced fiscal targets for 2015/16 contained in July’s summer budget.With June’s improvement being less than expected, the chancellor is now slightly off track to meet the reduced fiscal targets for 2015/16 contained in July’s summer budget.
However, this is nothing for George Osborne to worry about at his stage given that he is still very close to target – and the public finances can be volatile from month to month and subject to appreciable revisions.”However, this is nothing for George Osborne to worry about at his stage given that he is still very close to target – and the public finances can be volatile from month to month and subject to appreciable revisions.”
Samuel Tombs, senior UK economist at Capital Economics also sees “no need for the chancellor to panic yet” even though some figures are slightly worse than what the OBR had been expecting when it updated its forecasts alongside this month’s summer budget:Samuel Tombs, senior UK economist at Capital Economics also sees “no need for the chancellor to panic yet” even though some figures are slightly worse than what the OBR had been expecting when it updated its forecasts alongside this month’s summer budget:
“The overshoot in borrowing relative to the official forecasts entirely reflected stronger growth in current spending (2.9%) than the OBR expects (1.0%), rather than economic weakness. Indeed, annual growth in tax receipts of 4.4% slightly exceeded the OBR’s forecast of 4.1%.“The overshoot in borrowing relative to the official forecasts entirely reflected stronger growth in current spending (2.9%) than the OBR expects (1.0%), rather than economic weakness. Indeed, annual growth in tax receipts of 4.4% slightly exceeded the OBR’s forecast of 4.1%.
“June’s poor borrowing figure means that borrowing in the first three months of the fiscal year of £25.1bn was £31.3bn (20%) lower than last year. If this trend persists over the remaining nine months of the fiscal year, this year’s deficit would be £71.5bn, £2bn higher than the OBR forecast in the Summer Budget. However, estimates for borrowing in the first few months of the fiscal year should be taken with a pinch of salt, given that they are based on more forecast data than those for later months. Accordingly, we do not think that June’s borrowing figures should ring any alarm bells yet.”“June’s poor borrowing figure means that borrowing in the first three months of the fiscal year of £25.1bn was £31.3bn (20%) lower than last year. If this trend persists over the remaining nine months of the fiscal year, this year’s deficit would be £71.5bn, £2bn higher than the OBR forecast in the Summer Budget. However, estimates for borrowing in the first few months of the fiscal year should be taken with a pinch of salt, given that they are based on more forecast data than those for later months. Accordingly, we do not think that June’s borrowing figures should ring any alarm bells yet.”
10.14am BST10:1410.14am BST10:14
Unsurprisingly, the Treasury has welcomed the latest improvement in the public finances.Unsurprisingly, the Treasury has welcomed the latest improvement in the public finances.
A spokeswoman sends through this comment:A spokeswoman sends through this comment:
“Today’s figures show that our deficit reduction plan is working, with cumulative borrowing over £6bn lower than at this point last year. We have more than halved the deficit, but with debt over 80% of GDP the job is not done.“Today’s figures show that our deficit reduction plan is working, with cumulative borrowing over £6bn lower than at this point last year. We have more than halved the deficit, but with debt over 80% of GDP the job is not done.
“That is why we will continue to work through our long term plan to achieve a budget surplus in normal times and secure a better economic future for working people.”“That is why we will continue to work through our long term plan to achieve a budget surplus in normal times and secure a better economic future for working people.”
Read our response to today’s @ONS monthly Public Sector Finances statistics for June 2015: pic.twitter.com/xGweBXVTK3Read our response to today’s @ONS monthly Public Sector Finances statistics for June 2015: pic.twitter.com/xGweBXVTK3
What the spokeswomen means by running a “budget surplus in normal times” is what has been dubbed Osborne’s “Mr Micawber Principle”.What the spokeswomen means by running a “budget surplus in normal times” is what has been dubbed Osborne’s “Mr Micawber Principle”.
This is Osborne’s plan to run permanent budget surpluses in a bid to cut the national debt, which as today’s figures showed stands at £1.5tn in June, or 81.5% of GDP.This is Osborne’s plan to run permanent budget surpluses in a bid to cut the national debt, which as today’s figures showed stands at £1.5tn in June, or 81.5% of GDP.
His new fiscal framework, which the chancellor calls a “new settlement for the British economy”, allows the government to borrow only in exceptional circumstances. Osborne’s plan conjured images of Mr Micawber, a character in Charles Dickens’s David Copperfield. Governments were expected to at least balance the books in the 19th century and in the first three decades of the 20th century, when the public finances were run on the Mr Micawber principle that income exceeding spending equalled happiness and spending exceeding income equalled misery.His new fiscal framework, which the chancellor calls a “new settlement for the British economy”, allows the government to borrow only in exceptional circumstances. Osborne’s plan conjured images of Mr Micawber, a character in Charles Dickens’s David Copperfield. Governments were expected to at least balance the books in the 19th century and in the first three decades of the 20th century, when the public finances were run on the Mr Micawber principle that income exceeding spending equalled happiness and spending exceeding income equalled misery.
10.00am BST10:0010.00am BST10:00
Picking out some of the highlights from those UK figures on the state of the public coffers in June:Picking out some of the highlights from those UK figures on the state of the public coffers in June:
Reuters has more details here.Reuters has more details here.
9.39am BST09:399.39am BST09:39
The Office for National Statistics says that £0.8bn, or 8.3%, reduction in borrowing on a year ago came as income tax receipts rose to the highest level since records began in 1997. Corporation tax was also the highest amount on record.The Office for National Statistics says that £0.8bn, or 8.3%, reduction in borrowing on a year ago came as income tax receipts rose to the highest level since records began in 1997. Corporation tax was also the highest amount on record.
£9.4bn PSNB Ex in June 2015, down £0.8bn compared with June 2014 http://t.co/uJXKdDuAST£9.4bn PSNB Ex in June 2015, down £0.8bn compared with June 2014 http://t.co/uJXKdDuAST
The ONS cautions against reading too much into volatile monthly public finances data. It points to figures for the financial year-to-date (April 2015 to June 2015), showing public sector net borrowing was £25.1bn, a drop of £6.1bn, or 20% compared with the same period in 2014.The ONS cautions against reading too much into volatile monthly public finances data. It points to figures for the financial year-to-date (April 2015 to June 2015), showing public sector net borrowing was £25.1bn, a drop of £6.1bn, or 20% compared with the same period in 2014.
Updated at 9.50am BSTUpdated at 9.50am BST
9.34am BST09:349.34am BST09:34
UK public finances improve but by less than expectedUK public finances improve but by less than expected
Official figures just out show UK public sector borrowing fell again in June but by less than expected.Official figures just out show UK public sector borrowing fell again in June but by less than expected.
Public sector borrowing fell to £9.4bn in June from £10.2bn a year ago. The consensus forecast in the market was for borrowing to fall further to £8.5bn, based on a Reuters poll of economists.Public sector borrowing fell to £9.4bn in June from £10.2bn a year ago. The consensus forecast in the market was for borrowing to fall further to £8.5bn, based on a Reuters poll of economists.
9.26am BST09:269.26am BST09:26
European shares have edged lower in quiet trading this morning as the momentum from Monday’s relief rally peters out.European shares have edged lower in quiet trading this morning as the momentum from Monday’s relief rally peters out.
The FTSE 100 in the UK, Germany’s Dax is flat and France’s CAC40 are all down between 0.1 and 0.2%.The FTSE 100 in the UK, Germany’s Dax is flat and France’s CAC40 are all down between 0.1 and 0.2%.
As Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, notes it is debatable whether European stocks have further to climb. She comments:As Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, notes it is debatable whether European stocks have further to climb. She comments:
“Now that the Greek problem has been kicked into the long grass, the key question for investors is whether the recent gains in European equity markets are simply a relief rally - or whether fears over Greece obscured a wider improvement in European economies and there is still significant value to be found?“Now that the Greek problem has been kicked into the long grass, the key question for investors is whether the recent gains in European equity markets are simply a relief rally - or whether fears over Greece obscured a wider improvement in European economies and there is still significant value to be found?
On top of the effects of the ECB’s quantitative easing (QE), the Greek crisis has left the euro considerably weaker than it otherwise would have been. Greek fears also depressed company valuations. Nevertheless, European exporters should benefit significantly from the weak euro, while the financial sector should benefit from the effects of QE. As a consumer of energy and raw materials, Europe should also benefit significantly from the recent drop in commodity prices.On top of the effects of the ECB’s quantitative easing (QE), the Greek crisis has left the euro considerably weaker than it otherwise would have been. Greek fears also depressed company valuations. Nevertheless, European exporters should benefit significantly from the weak euro, while the financial sector should benefit from the effects of QE. As a consumer of energy and raw materials, Europe should also benefit significantly from the recent drop in commodity prices.
As we progress through second quarter earnings, investors from the dollar bloc may begin to see European assets as increasingly attractive. Corporations too may see European companies as potential targets for M&A. So while Greek problems may be far from over, there is scope for European markets to capitalise on the back of lower currency and commodity prices and an increasing interest from a wider global market seeking value.”As we progress through second quarter earnings, investors from the dollar bloc may begin to see European assets as increasingly attractive. Corporations too may see European companies as potential targets for M&A. So while Greek problems may be far from over, there is scope for European markets to capitalise on the back of lower currency and commodity prices and an increasing interest from a wider global market seeking value.”
Updated at 9.30am BSTUpdated at 9.30am BST
9.12am BST09:129.12am BST09:12
The big corporate news of the day is that Toshiba’s chief executive and president, Hisao Tanaka, and his predecessor, Norio Sasaki, have quit over a $1.2bn accounting scandal.The big corporate news of the day is that Toshiba’s chief executive and president, Hisao Tanaka, and his predecessor, Norio Sasaki, have quit over a $1.2bn accounting scandal.
An independent report said on Monday that Toshiba’s management knew about accounting regularities dating back to 2008. The company’s corporate culture put pressure on managers to manipulate figures to hit targets, the investigators said.An independent report said on Monday that Toshiba’s management knew about accounting regularities dating back to 2008. The company’s corporate culture put pressure on managers to manipulate figures to hit targets, the investigators said.
Japan’s finance minister stepped up the pressure today by saying the affair threatened to undermine faith in Japan’s companies when the country was trying to demonstrate improved corporate governance.Japan’s finance minister stepped up the pressure today by saying the affair threatened to undermine faith in Japan’s companies when the country was trying to demonstrate improved corporate governance.
The revelations at Toshiba follows a $1.7bn fraud at Olympus that was uncovered in late 2011.The revelations at Toshiba follows a $1.7bn fraud at Olympus that was uncovered in late 2011.
My colleague Sean Farrell’s story has more details:My colleague Sean Farrell’s story has more details:
Related: Toshiba boss quits over £780m accounting scandalRelated: Toshiba boss quits over £780m accounting scandal
9.02am BST09:029.02am BST09:02
Introduction: Focus turns to UK public financesIntroduction: Focus turns to UK public finances
Good morning and welcome to our rolling coverage of business and economics news from the UK, the eurozone and beyond.Good morning and welcome to our rolling coverage of business and economics news from the UK, the eurozone and beyond.
Things appear to have quietened down after a frantic month in Greece and on Monday banks re-opened after a three-week closure. Using a bridging loan, Athens also started to repay its debts to international creditors and the International Monetary Fund declared Greece was no longer in arrears.Things appear to have quietened down after a frantic month in Greece and on Monday banks re-opened after a three-week closure. Using a bridging loan, Athens also started to repay its debts to international creditors and the International Monetary Fund declared Greece was no longer in arrears.
But more challenges lie ahead, of course, and Greece’s ruling Syriza party has admitted it faces considerable political obstacles in pushing through reforms. The government, led by the prime minister, Alexis Tsipras, has appealed for unity as it faces another make-or-break vote in Athens on Wednesday.But more challenges lie ahead, of course, and Greece’s ruling Syriza party has admitted it faces considerable political obstacles in pushing through reforms. The government, led by the prime minister, Alexis Tsipras, has appealed for unity as it faces another make-or-break vote in Athens on Wednesday.
By Wednesday, the Greek parliament must, as requested by creditors, pass a law to overhaul its civil justice system, with the aim of speeding up processes and reducing costs. The government must also transpose the EU’s bank recovery and resolution directive into law.By Wednesday, the Greek parliament must, as requested by creditors, pass a law to overhaul its civil justice system, with the aim of speeding up processes and reducing costs. The government must also transpose the EU’s bank recovery and resolution directive into law.
Elsewhere, Asian shares edged up overnight after a higher close on Wall Street and gold prices pared some of their losses after a sharp sell-off on Monday that saw them hit a five-year low.Elsewhere, Asian shares edged up overnight after a higher close on Wall Street and gold prices pared some of their losses after a sharp sell-off on Monday that saw them hit a five-year low.
Coming up today, the UK is in focus with the latest official figures on the public finances due at 9.30am (8.30GMT). Economists expect the June figures to show a further improvement, with borrowing down again, after May’s data showed a jump in income tax receipts. That brought government borrowing down to £10.1bn, the lowest since 2007.Coming up today, the UK is in focus with the latest official figures on the public finances due at 9.30am (8.30GMT). Economists expect the June figures to show a further improvement, with borrowing down again, after May’s data showed a jump in income tax receipts. That brought government borrowing down to £10.1bn, the lowest since 2007.
On today’s data, Samuel Tombs at consultancy Capital Economics says:On today’s data, Samuel Tombs at consultancy Capital Economics says:
“June’s public finances figures look set to show much lower borrowing than a year ago. Indeed, government departments may have already begun to find the £3bn extra savings that the chancellor asked them to deliver this year. We have pencilled in borrowing of just £8bn in June, versus £10.4bn in June last year.”“June’s public finances figures look set to show much lower borrowing than a year ago. Indeed, government departments may have already begun to find the £3bn extra savings that the chancellor asked them to deliver this year. We have pencilled in borrowing of just £8bn in June, versus £10.4bn in June last year.”
There will be plenty more on chancellor George Osborne’s austerity drive and his recent summer budget when he is quizzed at 2.15pm by MPs on the influential Treasury committee. It will be streamed on www.parliamentlive.tv.There will be plenty more on chancellor George Osborne’s austerity drive and his recent summer budget when he is quizzed at 2.15pm by MPs on the influential Treasury committee. It will be streamed on www.parliamentlive.tv.
Updated at 9.04am BSTUpdated at 9.04am BST