Government borrowing rose in September to the highest level in five years, piling more pressure on Chancellor Rachel Reeves over the nation’s public purse.
Public sector net borrowing rose to £20.2 billion in September, £1.6 billion higher than the same month last year.
The FTSE 100 index is higher after last night’s strong performance on Wall Street, which included a record for Apple shares.
FTSE 100 Live Tuesday
- Borrowing tops OBR forecast
- Shawbrook sets IPO range
- HSBC appoints UK boss
Market update: Segro leads FTSE 100, B&M shares steady after slump
10:03 , Graeme EvansOptimism on the eve of the banking sector’s results season today lifted heavyweights HSBC and Barclays during a decent session for the FTSE 100 index.
London’s top flight, which benefited from a strong Wall Street handover, followed Monday’s 0.5% advance by adding another 16.52 points to 9420.09.
HSBC lifted 1.5% or 14.7p to 984.5p after Citigroup analysts sweetened their price target to 1160p and counterparts at Barclays moved to 1200p.
Barclays, which is due to report third quarter figures tomorrow, added 3.3p to 365.1p while NatWest and Lloyds Banking Group were near their opening marks.
Other risers in the top flight included Centrica after a gain of 1.8p to 173.7p, while National Grid improved 11.5p to 1143.5p.
Urban warehouse business Segro led the FTSE 100 after reporting that it had signed £22 million of new headline rent during the third quarter.
Momentum is also building in its development programme after the most productive quarter of pre-lettings since the first quarter of 2024. Shares rose 3% or 21.6p to 694.2p.
On the fallers board, Endeavour Mining and Fresnillo slipped 3% after the prices of gold and silver dropped from their record levels by 2% and 5% respectively. Gold stood at $4260 an ounce.
In the FTSE 250 index, B&M European Value Retail shares steadied after a second profit warning in a fortnight yesterday left them 23% lower.
The discounter rose 4.85p to 172.5p, aided by the support of analysts at Barclays and Deutsche Bank alongside lower price targets of 300p and 250p respectively.
Pizza Hut closure locations named
09:09 , Graeme EvansThe locations of 68 Pizza Hut restaurants due for closure have been announced by the company’s administrator.
DC London Pie, the firm running Pizza Hut’s UK dine-in restaurants under a franchise deal, appointed administrators from corporate finance firm FTI on Monday.
American hospitality giant Yum! Brands, which owns the global Pizza Hut business, said it has now bought the UK restaurant operation in a pre-pack administration deal, saving 64 sites.
Shawbrook sets IPO price range
08:53 , Graeme EvansShawbrook is set for a valuation of between £1.8 billion and £2 billion after the specialist lender today announced further details of its initial public offering (IPO).
The share price range for the IPO has been set at 350p-390p, with the final price due to be announced on 30 October following a book-building process.
The company, which will raise £50 million of proceeds from the offer, expects main market dealings to commence on 4 November.
The IPO will result in about 18% of shares being held in public hands, rising to 21% if an over-allotment option is exercised in full.
HSBC names new UK banking boss
08:32 , Graeme EvansHSBC has named former NatWest executive David Lindberg as the new head of its UK business.
Lindberg, who was NatWest’s chief executive of retail banking until earlier this year, will take up the role on 8 December.
He will take over the role from Ian Stuart, who will shift into a new position as group customer and culture director.
It is the latest leadership change under chief executive Georges Elhedery, who has spearheaded sweeping changes since taking the top job last year.
FTSE 100 maintains progress, HSBC up 2%
08:18 , Graeme EvansThe FTSE 100 index has followed Monday’s 0.5% improvement with a rise of 29.61 points to 9433.18.
HSBC, which has appointed former NatWest executive David Lindberg to run its UK operation, rose 2% or 16.85p to 985.9p.
Barclays lifted 3.8p to 365.6p ahead of tomorrow’s third quarter update, while Lloyds improved half a penny to 83.5p. In the mining sector, Rio Tinto gained 27p to 5157p.
Unilever shares fell 27p to 4632p after it said the timeline for the demerger of its ice cream operation had been impacted by the US government shutdown.
Borrowing tops OBR forecasts as tax rises loom
07:45 , Graeme EvansThe financial year-to-date Government borrowing figure of £99.8 billion is £7.2 billion higher than the Office for Budget Responsibility forecast in March.
The overshoot in the Chancellor’s chosen fiscal mandate of the current budget is even greater at £13 billion.
Capital Economics said: “Of course, it is not borrowing in 2025/26 that matters, but what the OBR forecasts the current budget to be in 2029/30, which is when the Chancellor’s fiscal mandate bites.
“We think it will forecast a deficit of about £17 billion, meaning the Chancellor will have to raise £27 billion, mostly via higher taxes if she wishes to maintain her buffer against her main fiscal rule.”
The consultancy said the key factor in September’s poor performance was the slow growth of tax receipts.
It added: “This is surprising given the economy hasn’t been terribly weak and perhaps suggests compositional effects are at play, such as the rise in food inflation prompting more spending on zero-VAT rated food items.”
September borrowing highest since 2020 - ONS
07:11 , Graeme EvansPublic sector borrowing – the difference between total public sector spending and income – topped £20 billion in September.
The figure of £20.2 billion was £1.6 billion or 8.6% more than a year earlier and represented the highest September borrowing since 2020.
Borrowing in the financial year to September stood at £99.8 billion, up £11.5 billion or 13.1% on the same six-month period of 2024 and the second-highest April to September borrowing since monthly records began in 1993.
ONS chief economist Grant Fitzner said: “Last month saw the highest September borrowing for five years.
“Debt interest, the cost of providing public services and benefits all increased compared with last year, more than offsetting the rise in receipts from central government taxes and National Insurance contributions.
“Likewise, the first six months of the financial year saw the highest overall deficit since 2020.”
FTSE 100 seen higher, Apple valuation hits $3.9trn
07:00 , Graeme EvansAsia markets have continued their strong start to the week, boosted by a strong handover from Wall Street.
The Dow Jones Industrial Average and S&P 500 index rose 1.1%, while the Nasdaq Composite rallied 1.4%.
Apple shares traded at a record level before closing 4% higher for a market valuation of $3.9 trillion.
The Hang Seng index and Shanghai Composite are more than 1% higher, with the Nikkei 225 up 0.4% after Monday’s 3% advance.
The FTSE 100 index is seen opening 0.2% higher after yesterday closing up 0.5% or 49 points at 9403.57.
Gold is 0.6% lower at $4332 an ounce, while Brent Crude stands at $60.98 a barrel.
