The FTSE 100 rebounds with the recovery of the markets; UK debt service cost hits record – business live

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The FTSE 100 rebounds with the recovery of the markets; UK debt service cost hits record – business live


Hello and welcome to our continued coverage of the global economy, financial markets, euro area and business.
UK government borrowing fell in June as the economy continued to recover from the shock of the pandemic … but interest payments on the national debt were increased by rising inflation.

The figures published by the National Statistics Offices this morning shows that public sector net borrowing (excluding cost of public sector banks) fell to £ 22.8 billion last month.

That’s £ 5.5 billion less than in June 2020, but remains the second highest June borrowing since monthly records began in 1993.

Office of National Statistics (ONS)
(@WE)

Public sector net borrowing excluding public sector banks stood at £ 22.8 billion in June 2021.

It was the second highest June loan since monthly records began in 1993, but 19.4% (£ 5.5bn) lower than in June 2020 https://t.co/ C2auqPO2iB pic.twitter.com/26nSiTP3Wu

July 21, 2021

The ONS reports that tax revenues were stronger in June than a year ago, following parts of the economy reopening earlier this year:

Central government revenue in June 2021 was estimated at £ 62.2 billion, an increase of £ 9.5 billion (or 18.0%) from June 2020. Of this revenue, Tax revenues increased by £ 8.1bn (or 21.7%) to reach £ 45.5bn. .

Public spending has increased, in part because of the cost of fighting the pandemic, according to the ONS:

Central government departments spent £ 31.1bn on goods and services in June 2021, an increase of £ 1.7bn (or 5.7%), of which £ 17.7bn for purchases and £ 12.8 billion for wages.
This cost includes the expenses of the Ministry of Health and Social Affairs (DHSC), decentralized administrations and other departments in response to the coronavirus pandemic, including the NHS Test and Trace program and the cost of vaccines.

Borrowings to date of this fiscal year are also lower than those of the first wave of Covid-19.

Since April, the government has borrowed around £ 69.5bn to balance the books, £ 49.8bn less than at the same time last year (but again, the second loan from highest April to June on record).

Last year’s record borrowing was also scaled back -om £ 1.5bn to an unprecedented £ 297.7bn (the highest borrowing since record breaking began). exercise in 1946).

This means that the national debt now stands at £ 2,218.2 billion, or about 99.7% of UK GDP, the highest ratio since the 102.5% recorded in March 1961.

Office of National Statistics (ONS)
(@WE)

Public sector net debt excluding public banks stood at £ 2,218.2 billion at the end of June 2021, or around 99.7% of GDP.

This is the highest ratio since the 102.5% recorded in March 1961 https://t.co/ebDHHWdOCE pic.twitter.com/XSIxosbK9D

July 21, 2021

The report also shows that interest payments on central government debt stood at £ 8.7bn in June 2021, the highest monthly payment on record (since April 1997) – down from just 2.7 billion pounds sterling in June 2020.

Much of this was due to an increase in the Retail Price Index (RPI), a measure of inflation, to which indexed gilts (government bonds) are pegged.

The ONS explains:

Interest on the £ 470.7 billion indexed gilts in circulation (at redemption value) increased by £ 6.0 billion in June 2021 compared to June 2020, mainly due to the sharp increase in the RPI between March and April 2021 impacting on the rise in indexed gilts delayed by three months.

Public finance statistician Fraser Munro has more details:

Fraser Munro
(@Fraser_ONS_PSF)

Interest payments on central government debt hit a record £ 8.7bn in June 2021, an increase of £ 6.0bn from the previous year, mainly due to fluctuations in the RPI to which indexed gilts are attached. pic.twitter.com/Ka7yJKgIj7

July 21, 2021

Fraser Munro
(@Fraser_ONS_PSF)

The additional interest expenditure on the accrued debt for June will not be reflected in the net cash requirements of the central government in the short term, this movement reflects an increase in government commitments which will materialize over time. that the existing stock of indexed gilts will be reimbursed.

July 21, 2021

Reaction to follow….

European stock markets are set for a slightly higher open, after a small rally yesterday after Monday’s drop.

IGSquawk
(@IGSquawk)

European opening calls:#FTSE 6891 +0,15%#DAX 15243 +0,18 %#CAC 6373 +0,41 %#AEX 723 +0.19%#MIB 24200 +0.38%#IBEX 8383 +0,29 %#OMX 2307 +0.15%#STOXX 3967 +0,27%#IGOpeningCall

July 21, 2021

Agenda

  • 7am BST: UK public finances for June
  • Noon BST: Weekly US Mortgage Approvals
  • 2:30 p.m. BST: Treasury committee hearing on the Office for Budget Responsibility report on budgetary risks
  • 3:30 p.m. BST: Weekly figures for US oil stocks from IEA



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