UK government borrowing is lower than expected; Unilever raises prices in the face of inflation – business live | Business

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Hello and welcome to our continued coverage of the global economy, financial markets, euro area and business.

UK government borrowing has nearly halved so far this fiscal year as the economy continues to recover from the pandemic, in a final health check ahead of next week’s budget.

Government borrowing fell to £ 21.8bn in September, down around £ 7bn from September 2020, and less than economists expected.

This was the second highest September borrowing since monthly surveys began in 1993, reflecting the cost of the pandemic.




British public finances Photograph: ONS

This means the UK has borrowed 108.1 billion pounds sterling since April – approximately £ 101 billion less than in the first half of the previous fiscal year, when the pandemic had pushed borrowing to record levels.

It is also significantly lower than £ 151.1 billion that the Office for Budget Responsibility had planned to borrow so far this year.

Borrowing so far this fiscal year has consistently been lower than OBR forecast, which could give Chancellor Rishi Sunak some flexibility in tax and spending.




UK public finances

Photography: ONS

In September, central government revenue reached around £ 62.3 billion, an increase of £ 6.2 billion from a year ago as tax revenue was boosted by the recovery.

Spending by central government agencies edged down, down from £ 1.3bn to £ 84.1bn.

Martin Beck, senior economic advisor at Club EY ITEM, says public finances have improved faster than expected:


“Higher than expected tax revenues continued to account for the bulk of the underestimation of borrowing, although spending also fell faster than expected.

In both cases, this reflects a much stronger recovery in activity than the conservative OBR forecast. These improvements are expected to continue and the EY ITEM Club expects borrowing for the full year to amount to just over £ 200bn, well below OBR forecast of £ 234bn. of pounds sterling.

Overall, the UK national debt now stands at £ 2,218.9 billion. This represents about 95.5% of gross domestic product (GDP), the highest ratio since the 98.3% recorded in March 1963.




UK public finances

British public finances Photograph: ONS

Also coming today

The crisis at Evergrande hovers again in the markets today. Stock markets are nervous after the Chinese real estate giant’s efforts to sell a stake in its real estate services unit collapsed, putting more pressure on the company as it tries to avoid default.

Shares of China Evergrande Group, the parent company of the sprawling empire built by former steel industry leader Xu Jiayin, fell nearly 12% in afternoon trading in Hong Kong as exchanges resume after a two-week suspension.

Evergrande Property Services, one of its most profitable units, fell 6.45%.

My colleague Martin farrer Explain :


Evergrande announced on Wednesday that it had officially abandoned its plan to sell a 50.1% tranche of Evergrande Property Services, and said there was “no guarantee” that it would be able to meet its financial obligations in order to to stay afloat.

The company, which is China’s second-largest real estate developer with thousands of projects, has debts of $ 305 billion.

But it is running out of liquidity thanks to a government crackdown on loans and a drop in real estate sales and prices, sending shock waves through the Chinese economy and global financial markets.

Kyle Rodda of IG said:


Sentiment turned slightly in Asian markets today, despite Wall Street’s positive lead, as market participants continue to focus on gains over inflationary pressures, slower growth and political risks .

News on the Evergrande front certainly didn’t help appetite for risk, with shares of the company dropping today on the return of a trading halt, with the announcement of a buyout deal for its failed real estate arm, adding to fears of a technical fault as soon as tomorrow.

European markets are expected to open lower.

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European opening calls:#FTSE 7200 -0.32%#DAX 15,487 -0.23%#CAC 6,693 -0.20%#AEX 803 -0.26%#MIB 26,493 -0.33%#IBEX 8997 -0.24%#OMX 2319 -0.32%#STOXX 4,161 -0.27%#IGOpeningCall


October 21, 2021

Agenda

  • 7 a.m. BST: Net public sector borrowing for September
  • 11am BST: CBI Industrial Trends Survey for October
  • 1:30 p.m. BST: UK weekly jobless claims
  • 3 p.m. BST: Eurozone consumer confidence for October

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