Excluding state-controlled banks, public sector net borrowing in August reached £20.5 billion, down from $5.5 billion from August a year earlier. On average, economists polled by Reuters had forecast borrowing of £15.6 for the month.
Last year, government borrowing in the UK soared due to heavy spending throughout the peak of the pandemic, reaching its highest level since World War II. During the current financial year, borrowing dropped significantly. However, it will very likely still come out high by historical standards.
UK public debt as a share of gross domestic product hit £2.023 trillion, or 97.6% of GDP, in August. This is the highest ratio seen since March 1963.
Next month, in October, Chancellor of the Exchequer Rishi Sunak will unveil new budget and growth forecasts. He will also reveal new multi-year spending limits for government departments and possibly longer-term fiscal goals.
Last week, a report by the Financial Times said that the Chancellor of the Exchequer would set out a target for ending borrowing for day-to-day spending within 3 years.
According to IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI), a lack of raw materials and available UK workers has caused August’s reading to drop to 55.0, notably lower than the 59.6 recorded in July. However, the PMI marked a fifth month exceeding the 50 threshold. Any recording over 50 indicates growth.
In a comment, group director at the Chartered Institute of Procurement and Supply, Duncan Brock, said: “The third consecutive monthly fall in growth in the services sector showed that a lack of staff and raw materials in August continued to rein back on recovery, after the spring surge.”
PMI’s data shows that staff recruitment picked up in August to its strongest since the survey began in July 1996, as businesses pushed to rebuild workforce numbers amid rising sales. However, due to highly competitive labour market conditions, August also saw a sharp climb in wages pressures.
Business optimism also increased to a three-month high. While 8% of survey respondents expected a decline, 60% forecasted expansion.
Interactive Investor, the online investment platform, recently released its clients’ most traded investments, by number of trades, in August 2017.
Commenting on the results, Lee Wild, Head of Equity Strategy at Interactive Investor said: “Following an exhausting 2,000-point rally between February 2016 and the record high in June this year, equity markets have extended their pause for breath, moving largely sideways over the summer months.
“Both the FTSE 100 and broader FTSE All-Share index rose less than 1% in August, though North Korean sabre-rattling tested investors’ nerves. Concerns that Kim Jong-un could nuke Guam, the US west coast or anywhere in between began a rollercoaster ride through the month, as enthusiastic buyers took advantage of each sell-off.
“Mopping up underperformers like Barclays proved a popular trade. After falling 6% in August, Barclays shares haven’t been this cheap since November 2016.
“Trading at a discount to most domestic peers on several key multiples, Barclays gatecrashed the top five most-traded large-caps on the Interactive Investor platform as buyers outnumbered sellers by more than two-to-one.
“AstraZeneca’s popularity proved fleeting as bargain hunting following July’s crash dried up. Investors who bought heavily last month below £43 are busy counting profits, currently a healthy 8%.
“Perhaps the biggest story to pass under the radar in August was the AIM market’s break above 1,000 for the first time since summer 2008. It’s easily outperformed the other domestic indices in 2017 so far, rising 20% in the past eight months.
“There were big moves in August by some of the junior market’s biggest companies, among them Frontier Developments (67%), Plus500 (45%), Blue Prism (33%) and IQE (29%).
“It was IQE that piqued interest among investors in August, almost toppling UK Oil & Gas from top spot as trading volume on the Interactive Investor platform more than doubled.
“A rally, given fresh momentum by a bullish update in July, spilled over into August, pushing IQE shares to new highs. There’s real excitement here as market watchers speculate about the possibility its chip components feature in Apple’s new iPhone 8, due to be launched next week (12 September).
“Internet of Things (IoT) hopeful Telit Communications came from nowhere in August following a profits warnings and shock departure of its CEO. A subsequent plunge in the share price and extreme volatility made it a trader’s favourite.
“Overseas, trading volume for Apple doubled as the shares surged by 10% in August. Apple shares typically nudge higher ahead of major product launches and the unveiling of the iPhone 8 next week has pushed the share price to a record high.”
(Source: Interactive Investor)
