FTSE and Wall Street rise as UK government borrowing falls but debt still highest since 1961

A look at how the major markets are performing on Friday

FTSE People look at the financial district over from Greenwich Park, in London, Britain June 22, 2023. REUTERS/Hannah McKay
The FTSE was muted on Friday after government borrowing data. Photo: Reuters/Hannah McKay (Hannah Mckay / reuters)

The FTSE (^FTSE) had a fairly subdued session on Friday as traders weighed up lower-than-expected borrowing figures in June, as well as news that UK debt is still at its highest since 1961.

London's benchmark index yoyoed between positive and negative territory in the first hour after opening, managing to close 0.2% on the day. Meanwhile the CAC (^FCHI) gained 0.6% in Paris, and the Frankfurt DAX (^GDAXI) was 0.6% lower.

According to the Office for National Statistics (ONS), public sector net borrowing came in at £18.5bn in June, a £0.4bn decrease from the same time last year, and more than 40% less than the record June borrowing in 2020.

However, borrowing during the month still marked the third-highest figure for June over the past 30 years. Energy support payments and inflation-linked benefits payments continued to fuel government spending.

“Now more than ever we need to maintain discipline with the public finances," chancellor Jeremy Hunt said.

“We are at a crucial juncture and need to avoid reckless spending. As this week’s fall in inflation showed, we will start to see results if we stick to our plan to halve inflation, grow the economy and get debt falling.”

The government’s debt pile was bigger than the country’s economic output in June. It is the first time this has happened for more than 60 years. The ONS said debt reached 100.8% of GDP.

Read more: Higher retail sales gives Bank of England fuel for interest rate rises

It came as UK retail sales volumes beat expectations in June, rising by 0.7% on the start of a busy summer sales period, according to new official data.

Numbers were buoyed by the extra bank holiday, the hottest June on record, and department stores and furniture shops also having a strong month, the ONS said. These were partially offset by falls in fuel, garden centres and clothes shops.

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