Britain’s stockmarket opened with modest gains as record borrowing figures underscored mounting pressure on the government’s finances heading into the October Budget.
The FTSE 100 rose 0.12% at 07:10 GMT, while Germany’s DAX slipped 0.09% and France’s CAC 40 edged up 0.04%. Sterling was unchanged against the dollar at $1.3367.
Public sector net borrowing reached £18.3 billion in August, the highest figure for the month outside the pandemic era, according to data released by the Office for National Statistics. That was £3.5 billion above the Office for Budget Responsibility’s forecast. Debt interest payments alone hit a record £8.8 billion for the month, adding further strain to public finances.
Cumulative borrowing year-to-August totalled £77.3 billion, £8.1 billion above the OBR’s March projection. KPMG said the August data implied Chancellor John Healey’s fiscal headroom had shrunk to around £12 billion, down from £23.6 billion at the spring forecast, ahead of his Budget on October 28.
In equity news, Kingfisher upgraded its full-year guidance after strong growth at Screwfix and in Poland and Iberia offset weaker sales at B&Q and Brico Dépôt France. Smiths Group reported full-year operating profit that beat forecasts and launched a process to divest a legacy U.S. asbestos liability. Advertising group M&C Saatchi saw first-half operating profit fall 31.7% on restructuring costs and softer Middle East revenue, pushing it to a statutory pretax loss.
On commodities, Brent crude rose 1.4% to $101.62 a barrel and WTI gained 1% to $93.27, buoyed by tensions in the Strait of Hormuz. French President Emmanuel Macron and U.S. President Donald Trump agreed after talks in New York to ease energy-market pressures and protect freedom of navigation through the waterway. Gold futures fell 0.64% to $4,355.67 an ounce and spot gold was down 0.55% at $4,320.35.
Geopolitical friction around Iran intensified as Abbas Araghchi, Iran’s foreign minister, told reporters upon arriving in New York for the UN General Assembly that trust in the organization had “eroded, or vanished entirely,” accusing certain nations of disregarding international law. U.S. envoy Mike Waltz said Washington remained open to negotiations if Tehran acted in good faith, while Iranian President Masoud Pezeshkian remarked that previous agreements “were not honoured.” The IRGC called on the U.S. and Israel to accept the region’s freedom from their presence. G7 foreign ministers meeting on the sidelines urged Iran to halt military support for Houthi forces in Yemen, calling it “a dangerous pattern of escalation.”
