European markets finished the day on a high on Wednesday in London, as Office for National Statistics (ONS) figures showed that public-sector net borrowing was estimated to have been £22.8bn ($31bn) in June.
This was slightly below forecasts and marked the second-highest June borrowing since monthly records began in 1993, £5.5bn less than in June 2020.
Public-sector borrowing for the financial year to June 2021 was estimated to have been £69.5bn. This was the second-highest financial year-to-June borrowing since monthly records began in 1993, and £49.8bn less than in the same period last year.
The ONS said that the pandemic has meant that estimated tax receipts are subject to more uncertainty than normal and therefore its impact on the public purse is not fully captured in the latest release.
“I’m proud of the unprecedented package of support we put in place to protect jobs and help thousands of businesses survive the pandemic, and that we are continuing to support those who need it," said chancellor Rishi Sunak. “However, it’s also right that we ensure debt remains under control in the medium term, and that’s why I made some tough choices at the last budget to put the public finances on a sustainable path.”
High-street retailer Next (NXT.L) was gliding at the top of the FTSE as it agreed to repay part of the savings it made from the government’s business rates holiday, after sales soared faster than expected. Shares rose 9.6% in early trade before falling back down to trade 8.2% higher.
Royal Mail (RMG.L) had less luck, however, sinking to the bottom of the index after it reported that volumes of parcels delivered had slid in the three months to June 30. Stock fell 3.1% by mid-afternoon.
As markets digest public borrowing figures, all eyes are still on the Delta variant of COVID-19, said Naeem Aslam, chief market analyst at Avatrade.
"The danger here is that the Delta variant could derail the whole recovery as new cases are rising exponentially, and hospitals are becoming full while healthcare systems are coming under intense pressure once again," he said.
"We have seen evidence of some countries rolling back some of the coronavirus restrictions in some cities in Asia, and the fear is that if the situation doesn’t come under control, we could easily see coronavirus-related restrictions implemented again."
The US headed into the day with more muted moves than Europe. The S&P 500 (^GSPC) was trading 0.6% higher, the Dow (^DJI) was up 0.7% and the Nasdaq (^IXIC) was up 0.5% by the time markets closed in London.
After hitting its highest point in six months on Tuesday, the dollar strengthened against the pound (GBPUSD=X), before falling again on Wednesday, as traders anticipated potentially hawkish monetary policy moves by the Federal Reserve.
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