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FTSE and European stocks mixed as UK borrowing rises and productivity dips

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The FTSE was down on Tuesday. Skyscraper buildings and skyline at Canary Wharf, Isle of Dogs, London/

The FTSE was down on Tuesday as public sector net borrowing was higher than expected. Photo: PA/Alamy (Benjamin John)

European stock markets were mixed on Tuesday as new data showed that UK borrowing rose in October whilst productivity in Britain has fallen.

In London, the FTSE 100 (^FTSE) was trading 0.5% lower by noon trade, as a stronger pound weighed on the index. The CAC (^FCHI) lost 0.2% in Paris, and the Frankfurt DAX (^GDAXI) was 0.2% higher.

According to the Office for National Statistics (ONS), the £14.9bn of public sector net borrowing, excluding banking groups, was higher than both the consensus forecast and the OBR’s March forecast of £13.7bn ($17.18bn).

This was also £4.4bn more than in October 2022, and more than September’s £14.6bn.

It is the second highest October borrowing since monthly records began in 1993, after October 2020 when the pandemic pushed the deficit up to almost £20bn.

However, borrowing so far this financial year is almost £17bn lower than forecast, providing some room for policy changes in Jeremy Hunt’s autumn statement on Wednesday afternoon.

The chancellor said: “We met our pledge to halve inflation, but we must keep on supporting the Bank of England to drive inflation down to 2%. That means being responsible with the nation’s finances.

“At my Autumn Statement tomorrow, I will focus on how we boost business investment and get people back into work to deliver the growth our country needs.”

Read more: Autumn statement: What to expect from Jeremy Hunt’s latest budget

It came as the ONS also revealed that public sector net debt reached £2.6tn, equivalent to around 97.8% of the UK’s annual gross domestic product (GDP).

This is 2.3 percentage points higher than in October last year and remains at levels last seen in the early 1960s.

Meanwhile, UK productivity declined by 0.1% in the three-month period to September, compared to the previous year, highlighting the weakness of the economy.

Bart van Ark, managing director of The Productivity Institute, said: “Another poor quarterly performance for productivity reinforces our view that Britain is in urgent need of a national agenda to double annual productivity over the next 10 years. We anticipate growth is likely to stall for 2023 on the whole.”

Live11 updates

  • AO World boosts profit outlook

    AO World boasted a half-year profit of £13m on Tuesday and boosted its outlook for the year. It came after the electricals retailer made suffered a £12m loss last year.

    The company said it tightly controlled advertising and marketing spending and reduced warehouse costs by 18% to £25.5m.

    It upgraded its pre-tax profit guidance to between £28m and £33m, up from previous estimates of around £28m.

    Shares initially climbed as much as 6.6% but have since fallen 3% as the company also reported a 12% decline in revenue to £482m in the six months to September.

  • Ofcom fines Shell Energy £1.4m

    Poznan, Poland, October 12, 2023: Shell oil petroleum fuel barrels in row concept. Fossil fuel company and petrol industrial containers 3d illustratio

    Poznan, Poland, October 12, 2023: Shell oil petroleum fuel barrels in row concept. Fossil fuel company and petrol industrial containers 3d illustratio (Skorzewiak)

    Ofcom has fined Shell Energy £1.4m for failing to tell its broadband customers when their contracts were expiring, or highlighting how much money they could save with a new deal.

    Alex Tofts, broadband expert at Broadband Genie, said:

    “This hefty fine for Shell Energy is a wake-up call for all providers thinking they can just switch off once they’ve signed up new customers.

    “Ofcom introduced end-of-contract notifications three years ago as a way to help the millions of consumers who end up overpaying for their broadband. With typical contracts lasting 18 months or more, it’s easy to forget when your current internet package is expiring, so these advance nudges – by email, text or letter – are vital to stop people sleepwalking onto rolling deals, and increased bills.

    “Many households have benefited from this regulation, either through saving money after switching to a cheaper deal or being able to move to a faster package for less.

    “Any provider not putting this safety net in place is showing a disregard for consumers, and the fact that well over one in ten of Shell Energy’s customers were affected shows how severe this rules breach was.”

  • Tax receipts up almost £24bn

    Tax receipts so far this financial year have risen £23.9bn to £457.3bn, according to new data from HM Revenue and Customs (HMRC).

    It reported that since April, cash receipts were higher mainly from Income Tax, Capital Gains Tax and National Insurance contributions (NICs) (£11.2bn), VAT (£8.2bn) and business taxes (£7.1bn).

    Receipts from Inheritance Tax have totalled £4.6bn for April-October, a rise of £500m compared with last year.

    It comes amid speculation that Jeremy Hunt could make cuts to inheritance tax which is paid by fewer than 4% of all estates.

  • UK retailers set to make £8.74bn across Black Friday weekend

    Sydney, Australia. 20th November 2023. Black Friday sales have already begun at many retail outlets in Sydney ahead of the official Black Friday on 24th November 2023. Pictured: Superdry. Credit: Richard Milnes/Alamy Live News

    Sydney, Australia. 20th November 2023. Black Friday sales have already begun at many retail outlets in Sydney ahead of the official Black Friday on 24th November 2023. Pictured: Superdry. Credit: Richard Milnes/Alamy Live News (Richard Milnes)

    Retailers are expected to make £8.74bn over Black Friday weekend this year, according to a new report.

    The Shopping for Christmas 2023: Black Friday Weekend report, by VoucherCodes.co.uk, predicts that this year’s total sales will rise by a marginal 0.4% from £8.71bn in 2022.

    Other key stats include:

    • A staggering £2.63m will be spent every minute this Black Friday Weekend

    • Cyber Monday sales up 6% YoY reaching a total of £3.34bn

    • £22.67bn is expected to be spent by consumers over the two-week Black Friday period (20 Nov – 1 Dec)

    • Two-fifths of Brits predicted to make a purchase this Black Friday Weekend

  • How could a stamp duty incentive help the property market?

    The latest research by estate agent comparison site GetAgent.co.uk, has looked at what the previous stamp duty holiday did for the property market across England.

    The research shows that:

    • The annual rate of house price growth has slowed to just 0.8%. In contrast, the annual rate of growth seen in September 2021, when the previous stamp duty holiday ended, sat at a heady 11.4%.

    • During the previous stamp duty holiday (July 2020 to September 2021), the average house price across England climbed by 13.3%. While impressive in itself, GetAgent then compared this rate of growth to the same time period preceding the stamp duty holiday (April 2019 to June 2020).

    • During this time the average house price across England increased by just 2.5%, meaning the stamp duty holiday helped accelerate house price growth to the tune of 10.8%.

    • Every region of England saw a higher rate of house price growth during the stamp duty holiday, with the North East topping the table. Across the region, house prices climbed by 18.4% during the stamp duty holiday versus just 0.6% during the same time period prior, a difference of 17.8%.

    • London saw the lowest rate of house price growth, but at 5.2%, house prices across the capital still increased by 3% more when compared to the same time period prior to the stamp duty holiday.

  • Pound and oil update

    British Pound and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration

    British Pound and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration (Dado Ruvic / reuters)

    The pound (GBPUSD=X) is currently more than 0.25% higher against the US dollar at $1.2530, adding pressure to the FTSE 100 in London. Against the euro, sterling (GBPEUR=X) is also almost 0.3% higher at 1.1451.

    Meanwhile, Brent Crude (BZ=F) prices fell in early trade, reversing steep gains made in the past two sessions.

    It is down 0.5% at the time of writing, impacting energy stocks.

    Investors have turned cautious ahead of an OPEC+ meeting this Sunday when the producer group may discuss deepening supply cuts.

    Heavyweight energy stocks lost as much as 1% on London’s benchmark index, tracking oil prices.

  • Capita to axe up to 900 jobs

    Outsourcing giant Capita has announced it could axe up to 900 jobs in a bid to cut costs.

    The company, which runs outsourced IT services for substantial parts of the NHS, is aiming to save £60m a year from the first quarter of next year.

    It “continues to trade in line with its expectations” having won contracts worth a total of £2.9bn so far, ahead of its total of £2.6bn for last year.

    Capita posted a pre-tax loss of £67.9m for the first six months of the year, compared to £100,000 profit a year prior.

    It employs 43,000 people, mostly in the UK but also across Europe, India and South Africa.

    Jon Lewis, chief executive, said:

    We are, today, announcing the accelerated delivery of the efficiency savings announced in our Half Year Results with a £20m increase in overhead cost reduction to £60m on an annualised basis from Q1 2024.

    As part of the organisational review which underpins the programme we are announcing today, we continue to identify further areas of cost efficiency and will pursue these during 2024.

  • Interest payable on debt hits October record

    The interest payable on central government debt came in at £7.5bn last month, the highest in any October since monthly records began in April 1997.

    This is £1.1bn more than in October last year, and £2.6bn more than the Office for Budget Responsibility (OBR) predicted.

    The interest payment on index-linked government debt is linked to the retail prices index measure of inflation.

    The ONS said:

    The large month-on-month increases in Retail Price Index (RPI) observed since early 2021 have led to substantial increases in debt interest payable, with the largest three months on record occurring in 2022 and 2023.

  • UK borrowing rises in October

    Chancellor of the Exchequer Jeremy Hunt leaves BBC Broadcasting House in London, after appearing on the BBC One current affairs programme, Sunday with Laura Kuenssberg. Picture date: Sunday November 19, 2023.

    Chancellor of the Exchequer Jeremy Hunt leaves BBC Broadcasting House in London, after appearing on the BBC One current affairs programme, Sunday with Laura Kuenssberg. Picture date: Sunday November 19, 2023. (James Manning, PA Images)

    According to the Office for National Statistics (ONS) on Tuesday, the £14.9bn of public sector net borrowing, excluding banking groups, was higher than both the consensus forecast and the OBR’s March forecast of £13.7bn.

    This was also £4.4bn more than in October 2022, and more than September’s £14.6bn.

    It is the second highest October borrowing since monthly records began in 1993, after October 2020 when the pandemic pushed the deficit up to almost £20bn.

    However, borrowing so far this financial year is almost £17bn lower than forecast, providing some room for policy changes in Jeremy Hunt’s autumn statement on Wednesday afternoon.

    The chancellor said:

    “We met our pledge to halve inflation, but we must keep on supporting the Bank of England to drive inflation down to 2%. That means being responsible with the nation’s finances.

    “At my Autumn Statement tomorrow, I will focus on how we boost business investment and get people back into work to deliver the growth our country needs.”

    It came as the ONS also revealed that public sector net debt reached £2.6tn, equivalent to around 97.8% of the UK’s annual gross domestic product (GDP).

    This is 2.3 percentage points higher than in October last year and remains at levels last seen in the early 1960s.

  • Asia and US stocks

    Shares in Asia finished lower overnight despite a rally on Wall Street ahead of the US Thanksgiving holiday.

    The Nikkei () fell 0.1% on the day in Japan, while the Hang Seng () finished almost 0.3% lower in Hong Kong as investors locked in profits after recent gains. The Shanghai Composite () was treading water by the end of the session.

    It came amid reports of Beijing’s latest stimulus rollout for the property sector.

    On Wall Street, the S&P 500 () rose 0.7% on the day, and the tech-heavy Nasdaq () was 1.1% higher, its highest level since April 2022. The Dow Jones () was 0.6% up in New York.

    Meanwhile the dollar languished near its lowest in two-and-a-half months on expectations that the US Federal Reserve has likely finished raising interest rates.

    The yield on the globally influential 10-year US Treasury yields dropped 0.43%.

  • Coming up…

    Good morning, and welcome to our live blog where we will be covering the latest news across the global economy and what’s moving markets.

    Here’s a quick look at what’s on the agenda for today…

    • 7am: UK public finances for October

    • 7am: Trading announcement: Cranswick, AO World

    • 9am: EU current account

    • 10.15am: Treasury committee to question Bank of England governor Andrew Bailey on inflation and economic data

    • 1.30pm: Canadian inflation rate for October

    • 3pm: US existing Home Sales

Watch: How does inflation affect interest rates?

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