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Business - Need to Know

Afternoon Edition

Good afternoon. Fresh on the heels of yesterday’s positive news that Britons are taking advantage of lower prices and spending more on the high street, the Office for National Statistics (ONS) has cheered us up again today with better-than-expected public sector borrowing figures.

UK government borrowing fell to £6.8 billion in April, down from £9.3 billion at this time last year and ahead of the £8.1 billion analysts had forecast. This is also the lowest amount borrowed since April 2008 when public borrowing came in at £2.5 billion. The ONS has revised its previous estimate of borrowing for the full financial year up from £87.3 billion to £87.7 billion, this was still comfortably below the government’s own target of £90.3 billion.

However, the ONS has warned that its figures could be subject to revision and said although the UK deficit had fallen by a third since peaking in 2010, public sector net debt was still “maintaining a gradual upward trend”. So more penny pinching for the Treasury to do. We'll have a story up soon on The Times's Business page.

Big banks are to face further scrutiny from the Financial Conduct Authority which said this morning it would, for the first time, investigate whether banks were offering a fair and transparent service when earning billions in fees for arranging mergers and bond and share sales. The regulatory watchdog, which has spent the past few years knee-deep in investigations around manipulation of the currency and interest-rate markets, said it felt customers may not be getting value for money from wholesale banking.

Vodafone’s shares have surged again this morning and are up 4 per cent in early trading on continued speculation about a possible tie-up with John Malone’s Liberty Global group. Since Tuesday, Vodafone’s shares have climbed from 226p a share to 252p at noon. Clearly the market thinks something is up.

In other news, which will not please environmentalists, Third Energy, the UK shale explorer, is seeking planning permission to frack for gas near the Yorkshire town of Malton. It said if the tests were successful it would be “followed by the production of gas for the generation of electricity”.

Meanwhile, at 1.30pm we will also find out what is happening with US inflation. For live reaction on this and more news on the day's events, follow our Business Now live blog. You can also follow The Times Business on Twitter for regular updates - @TimesBusiness.

This week's Business podcast sees Andrew Clark, our deputy business editor, Philip Aldrick, economics editor, and Kathryn Hopkins, property correspondent, discuss next week’s Queen’s Speech and G7 summit. Click here to listen or download it from Soundcloud and iTunes.

The lunchtime email returns on Tuesday after the bank holiday and you will be back in the capable hands of Rebecca Clancy, Breaking News Editor, Business.

Enjoy your weekend.

Deirdre Hipwell
The Times
deirdre.hipwell@thetimes.co.uk

The FTSE 100 is holding firm, up 42.32 points to 7,055.79, closing in on last month’s record closing high of 7,103.98 points.

Miners are making good ground for a second day following indications yesterday that China could stimulate the economy further and a number of bluechips have been given a shove by broker research.

Travis Perkins is up 36p to £22.12 after analysts at Jefferies upgraded the stock to a "buy". Heading south is Whitbread, 15p to £52.45, after the hotels-to-coffee chain announced Alison Brittain, a senior Lloyds banker, had been appointed as the company’s next chief executive.

On AIM, trading in Plus500’s shares was suspended “pending an announcement”. The contracts for difference firm announced earlier this week that it was running tighter checks on customer accounts to comply with money-laundering rules and has come under attack from short-sellers and bloggers. The shares have fallen from 750p to 275p in a week.

Alex Ralph
Market Reporter

Britain's deficit might be narrowing, but public sector net debt continues to "trend upwards", according to the Office for National Statistics.

Janet Yellen, chairwoman of the Federal Reserve, will be giving a speech in Providence, Rhode Island, at 6pm BST. Following Fed minutes this week that showed members of the US central bank were cooling on the idea of an imminent rise in interest rates, investors will be listening for any hint of when policy tightening might actually start.

The consumer price index, a key measure of inflation which is out today at 1.30pm BST, is not likely to provide Dr Yellen with reason to rush for lift-off. Economists at IHS expect a narrow 0.1 per cent gain in core prices (excluding food and energy), with lower petrol and softer food prices, weighing on the numbers. Excluding food and energy, the consensus forecast is for an increase of 0.2 per cent from the previous month and 1.7 per cent year-on-year.

Campbell’s Soup was recently told by Target, the retail giant, that its food products would be given less prominence in their stores as the chain moves to more organic and healthier brands. Campbell’s is not taking this lying down and announced a cost-saving and reorganisation plan earlier this year. Analysts expect earnings per share of 52 cents, against 62 cents for the same period last year, and revenue of $1.93 billion, compared with last year’s figure of $1.97 billion.

Deere & Co, the machinery maker, reports before the opening bell and analysts predict that weakness in its agriculture equipment sales will only be partially offset by gains at its construction and forestry division. Wall Street is looking for earnings per share of $1.57, down 40 per cent on the same period last year, and revenue of $7.6 billion, 17 per cent lower than the year ago figure.

Markets: Futures suggest a mixed start to the day on Wall Street. The Dow Jones is expected to open up 2 points at 18,260, the S&P to fall 1 point to 2,127, and the Nasdaq to grow 1.5 points to 4,530.25.

Alexandra Frean
US Business Editor
@freanie

"There is no shortcut to fixing the public finances, so we have to continue with the hard work of identifying savings and making reforms necessary to finish the job and build a resilient economy."
A Treasury spokesman says the borrowing figures show the government's deficit reduction plan is working
Today's FTSE 100 risers and fallers
Up (%)
Vodafone Group 4.0
Anglo American 2.03
BHP Billiton 1.99
Fresnillo 1.97
Randgold Resources 1.80
* As at noon
Down (%)
International Consolidated Airlines Group -1.44
Severn Trent -1.42
BT Group -1.07
easyJet -0.62
Tesco -0.54
* As at noon
The Markets Today
FTSE 100 7,055.79 0.60%
FTSE 250 18,229.49 0.41%
Cac 5,131.47 -0.30%
Dax 11,811.02 -0.45%
Brent Crude 66.43 -0.94%
Gold 1,212.68 0.69%
GBP/US 1.5640 -0.13%
GBP/euro 1.3893 -0.76%
10Y Gilt 127.425 0.49%
* As at noon
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