FTSE 100 best day in five months; UK debt costs rise; house sales surge – as it happened

Graeme Wearden

from on 2021-07-21 15:53 (#5ME1V)

Rolling coverage of the latest economic and financial news

Latest: FTSE 100's best day since February
Property transactions rocketed in June stamp duty race
British public sector net borrowing fell to 22.8bn in June
Borrowing down 5.5bn on June 2020 as economy reopens
Interest payments on government debt hit record 8.7bn last month
Debt servicing costs pushed up by higher RPI inflation
Markets rallying after Monday's wobble

4.53pm BST

With the London market closed after its best day in months, it's time to wrap up. Here's today's main stories:

4.46pm BST

The London stock market has posted its best day in five months, as shares bounce back from Monday's rout.

The FTSE 100 index of blue-chip shares has rallied by 1.7% today, closing 117 points higher at 6,998 points. That's its best percentage gain since 15th February, just two days after its worst fall in two months.

Less than two days after Monday's sharp falls, markets have undergone a complete and utter mood change. The concern that rising Delta infections will slow down the economic rebound, appears to have been replaced by optimism that today's better than expected company reports speak to a consumer that is down but by no means out.

That's not to say Monday's concerns have disappeared completely, but today's trading updates appear to have had the effect of adding some calming balm, on some early week frayed nerves.

European equity close: Big bounce across the board

Stoxx 600 +1.7% -- best in 11 weeks
UK FTSE 100 +1.8% -- best in 5 months
German DAX +1.4%
French CAC +1.9%
Spain IBEX +2.4%
Italy MIB +2.3%

European Closing Bell

FTSE 100 +1.76% at 7,002

STOXX 50 +1.77% at 4,026

DAX +1.35% at 15,421

CAC 40 +1.86% at 6,465

IBEX 35 +2.67% at 8,581

MIB +2.27% at 24,656

SMI +0.67% at 12,026

~ @Newsquawk

4.09pm BST

Our economics correspondent Richard Partington has written a handy thread about the jump in UK debt interest costs last month....

Lot's going on around the public finances today - a short thread to go with our story -- UK borrowing falls as debt interest payments jump to 8.7bn https://t.co/2x0jcPaKHn

First thing worth noting: despite the sharp rise in debt interest payments to a monthly record - and total debt close to 100% of GDP - the cost associated with servicing UK debt remain historically very low. (as per this chart from 2020 from @TheIFS) pic.twitter.com/RDKj1aBJgh

The @OBR_UK notes today that debt interest spending is still 900m lower for 2021-22 than forecast in March, even after the record June rise.

And despite debt rising from 80-100% of GDP, lower interest rates meant that estimate was already 13bn BELOW the pre-Covid forecast.

But there is concern in the Treasury, and at the OBR, about the UK's vulnerability to rising debt costs.

OBR warned earlier this month the impact from a 1ppt rise in rates was now 6x times greater than pre-2008 financial crisis, and almost 2x pre-Covid.
https://t.co/5Q9SmpL03M

With inflation rising (though many economists argue this might prove temporary), the chancellor's hand to keep tight control of public spending is strengthened today.

But it's still worth putting today's debt cost news in context.

Also worth noting @TheIFS reckon 17bn per year of cuts to public services are already planned.

But demand on public services is rising and are not yet budgeted for. From the costs of the ongoing pandemic response, to catch-up funds and other pressures. https://t.co/UmVZS85vCB

3.57pm BST

Business leaders, health experts and trade associations representing tens of thousands of businesses have hit out at the government's handling of the pingdemic" self-isolation crisis.

Amid mounting concern that staff absences are stifling economic recovery, Princess Yachts and luxury carmaker Bentley added their names to a growing list of firms with a significant number of workers absent.

3.31pm BST

Over in parliament, the head of the fiscal watchdog has warned that the government will need to be quicker on its feet than normal to manage the public finances if interest rates go up.

Richard Hughes, chairman of the Office for Budget Responsibility, told MPs that government borrowing costs will react faster than before, if higher inflation and growth lead to a pick-up in interest rates.

The government's ability to get breathing space from faster growth before interest rates catch up, or indeed (from) higher inflation before interest rates catch up, is just a lot less than it's been in the past."

The public finances have become more sensitive to interest rate changes - particularly in the short term.

Read more in chapter 4 of the #OBRfiscalrisks report: https://t.co/Lg08Z0CJIU pic.twitter.com/BJPJSy4cYF

The economy has proved surprisingly resilient during the pandemic, thanks in part to unprecedented peacetime fiscal policy response. IMF data shows UK's rescue package amounted to 354 billion in total & was third largest among 35 advanced economies after US & New Zealand. #ICYMI pic.twitter.com/P0bUNdkOF3

Potential unfunded legacy costs of the pandemic for public services pose a key risk to the fiscal outlook. Considering just selected pressures in three key areas, the Government could face spending pressures of around 10 billion a year on average in the next three years. #ICYMI pic.twitter.com/63ladnKmZG

3.13pm BST

Insured losses from natural disasters hit a 10-year high of $42 billion in the first half of 2021, with the biggest loss related to extreme cold in the United States in February, insurance broker Aon said today.

Overall economic losses came in below their 10-year average, however, at $93 billion, Aon said in a report.

Disasters which hit developed countries typically lead to greater insured losses. Seventy-two percent of global insured losses occurred in the United States in the first half, Aon said.

Natural disaster H1 insured losses hit 10-year high-Aon - https://t.co/A1d4BY0X3v

3.09pm BST

The recovery in stock markets comes alongside a rise in government bond yields, as investors move out of safe-haven assets.

US Treasury yields have risen back to 1.27% today, having tumbled below 1.15% at one stage yesterday.

Myles Udland: The relationship between growth stocks and Treasury yields has been at the center of making sense of financial markets moves in the COVID era. https://t.co/jiZXu1PuNM via @MylesUdland @YahooFinance pic.twitter.com/iYxeYCm2yB

2.39pm BST

The US stock market has opened higher, with the Dow up 210 points or 0.6% to 34,722 points in early trading.

And Coca-Cola are the top riser, up 2.7%, followed by aerospace manufacturer Boeing (+2.3%) and wireless network operator Verizon (+2%).

U.S. stocks open higher https://t.co/NGe8C7PYGq pic.twitter.com/Caxu3IFhLD

2.35pm BST

Here's Holly Inglis, beverages analyst at GlobalData, on Coca-Cola's strong quarter (net revenues grew 42% while earnings-per-share rose 48%):

Success for Coca-Cola across all regions in Q2-2021 clearly emphasises a step in the right direction for the company to achieve pre-COVID-19 volumes. Not only does growth reinforce the company's stable market position, but highlights recovery of the non-alcoholic beverages market across many parts of the world - although countries such as India continue to be impacted by COVID-19.

Coca-Cola's 14% growth in Q2-2021 for sparkling soft drinks is no easy feat in a category that has continually seen a downward trend in recent years. According to GlobalData's latest survey (Q2-2021), one in four (38%) of consumers are actively trying to reduce their sugar consumption, which has created a challenging landscape for soft drink producers. Strong brand recognition, alongside continued innovations to core brands such as Coca-Cola Zero Sugar, have helped stimulate this growth.

With restaurants back in action across most of the world, Coca-Cola saw a sizable revenue bump compared to last year. While some of the increase can be attributed to easier comparisons - last year's away-from-home sales were practically non-existent - you can't help but admire the fact that the group's also marginally ahead of where it was at this time in 2019. That's all the more impressive given pandemic headwinds still exist to some degree.

The reopening of Costa Coffee in the UK has been a breath of fresh air for Coke as well-the group took on a sizable amount of debt to acquire the coffee chain and get it's foot in the door of the hot beverage market, only to see its revenue dry up a year later. With things getting back to normal, Coke can carry on with plans to develop the brand further.

2.13pm BST

Drinks giant Coca-Cola has beaten sales expectations after seeing a bounceback as economies reopened.

Coke's organic revenue climbed 37% in the three months to July 2nd, beating forecasts of 29% growth and ahead of the 2019 level.

Our results in the second quarter show how our business is rebounding faster than the overall economic recovery, led by our accelerated transformation. As a result, we are encouraged and, despite the asynchronous nature of the recovery, we are raising our full year guidance.

We are executing against our growth plans and our system is aligned. We are better equipped than ever to win in this growing, vibrant industry and to accelerate value creation for our stakeholders."

Coca-Cola shares near +3% at $57.45 in premarket trading after reported Q2 revenue surpassing 2019 levels, raising its full-year outlook. Coke reported Q2 net income of $2.64B or $0.61 per share, up from $1.78B, or $0.41, a yr earlier. Net sales +42% to $10.13B, tops expectations

Coke sales surge in Q2 as re-openings gain momentum https://t.co/LyjUOFbHKo pic.twitter.com/h5E0bjjVhd

2.02pm BST

In the US, mortgage applications declined last week - indicating that high prices, low availability and borrowing costs might have deterred some potential buyers.

The Mortgage Bankers Association says its seasonally adjusted market index fell 4.0% in the week to Friday July 16. New home loan applications slid 6.4%, while refinancing applications fell 2.8%.

In the US, mortgage applications for house purchase fell by 6.4% last week, and the 30-year mortgage rate was little changed at 3.1%. pic.twitter.com/Q37wYVtrZi

Limited inventory and higher prices are keeping some prospective homebuyers out of the market,"

Volatile interest rates cause mortgage demand to drop @CNBC @MBAMortgage https://t.co/vCQJe3T4T2

1.36pm BST

The FTSE 100 is clawing its way back towards the 7,000 point mark.

It's up 108 points or 1.5% at 6089, meaning it's now recovered almost all of the 44bn wiped out on Monday.

A bumper rebound for US stocks has fed through to Europe this morning, with the FTSE 100 gaining over 1%. That comes despite Chinese efforts to undermine prices in key commodities, with the government laying out plans to auction reserves of zinc, aluminium, and copper.

European markets are following their US counterparts higher in early trade today, with reopening stocks finally finding the kind of love many had expected in a week dominated by the UK's removal of Covid restrictions.

1.23pm BST

The FTSE 250 index of medium-sized is on track for its best day in five months, as stocks recover from Monday's dive.

The UK-focused index is up 1.7% today, gaining 374 points to 22,494, led by cinema chain Cineworld (+9%) and travel company National Express (+7.8%).

The situation with the more contagious delta strain of the Covid-19 virus is getting worse, especially in Asia. South Korea and Thailand have reported record infections, with the Japanese capital Tokyo likely to see a surge in cases as the Olympics gets underway. Efforts across many regions to curb the virus spread has dampened high expectations about demand for things like travel and tourism etc.

The only positive spin one can put on this in so far as equities are concerned is that it will help QE tapering by central banks. And that could be one of the reasons why we have seen the markets rebound over the past couple of days. Another reason is the generally supportive corporate earnings that we have seen so far.

1.07pm BST

BrewDog swung into the red last year as booming sales of its craft beers online during Covid-19 pandemic lockdowns failed to offset the impact of bar closures.

The Aberdeenshire-based company sank to a 13.1m pre-tax loss in 2020. This was despite reporting revenues of 238m for the year, 10% higher than in 2019.

1.01pm BST

Over in Australia, the impact of Covid-19 restrictions is starting to hit the economy.

12.41pm BST

The governor of the Bank of England has pledged to do more to tackle systemic racial inequality after a hard-hitting review found the 327-year-old institution was failing to do enough to promote diversity.

In an article for the Guardian, Andrew Bailey conceded that structural and cultural change was needed in the light of a report by the Bank's governing court detailing a series of failings and weaknesses in Threadneedle Street's approach to inclusion.

We are well aware of just how damaging it can be for organisations to be made up solely of people from similar backgrounds who think in the same way: the dearth of diversity and inclusion in financial services contributed to the unchallenged, dangerous decision-making that helped drive the financial crisis of 2008.

After last year's horrific murder of George Floyd, I had a series of wide-ranging and, quite frankly, humbling conversations with my minority ethnic colleagues at the Bank. I want to thank all of those who were so open and honest with me about their experiences. It was apparent that, despite the substantial efforts by the organisation over the past decade or so, we were making insufficient progress on diversity and inclusion, particularly in the area of ethnicity. And it is against that backdrop that I - alongside the other governors and court (our governing board) - commissioned a review into ethnic diversity and inclusion, which we have published today.

12.08pm BST

Nick Leeming, chairman of Jackson-Stops, confirms that June was a blisteringly busy time in the estate agency business:

Housing transactions continued to soar in June and are reported today as being the highest monthly total since the introduction of the dataset in 2005. This will come as no surprise to our branches who have been completely inundated with buyers searching for a new way of life post-pandemic, fuelled by an eagerness to beat the Government's extended Stamp Duty deadline at the end of the month.

These complex and ongoing changes in lifestyle and working patterns will be a catalyst for demand for some time to come, especially in suburbs and countryside villages and towns within reasonable commuting distance of major business centres.

Our analysis of house prices, growth, train reliability, speed of journey and train crowding revealed seaside towns on the Kent coast provide the best options for buyers considering these factors. Our data indicates Folkstone as the best overall commuter location, whereas Herne Bay and Sandwich rank first and second in terms of desirable towns which allow access to London within 90 minutes.

11.41am BST

UK property transactions surged in June, as buyers rushed to complete deals before the stamp duty holiday was curtailed.

New figures from HMRC show there were 213,120 residential transactions last month, the highest since the survey began in 2005.

There were 198,240 residential property transactions in the UK in June 2021 (just before the Stamp Duty holiday was tapered) according to HMRC, which was 74.1% higher than in May 2021 & 99.6% higher than the average for 2018-19...#ukhousing #housing https://t.co/c0iJCJrvgC pic.twitter.com/uJmch2kRfL

Today's data paints a picture of a breathless stampede to the finishing line as frantic buyers battled to get their deals inked before the Stamp Duty holiday began to taper.

We've become accustomed in recent months to seeing records smashed, but spikes like this are still jaw-dropping nonetheless. It is quite possible we will never witness anything like this again in our lifetime.

Instant Info - HMRC Residential Transactions pic.twitter.com/hGgWF2sS7u

MASSIVE NUMBER ALERT: 213,120 housing transactions in June according to HMRC, the highest monthly figure since October 1988 and the 6th highest monthly figure in the past 40 years. A heady mix of a pre-announced stamp duty deadline, pandemic reaction and low costs of debt. pic.twitter.com/yvsFDQRMqF

The tapering down of the temporary reduction in stamp duty began at the end of June, meaning this was a bumper month'. Investors, homeowners, solicitors and banks pushed hard to get transactions done in time for buyers to capitalise on the summer discount to an otherwise costly transaction tax.

Medium term, the boom in housing transactions has in many ways resulted from Covid and and policies around it, designed to protect consumer and investor confidence, rather than happening despite the pandemic.

11.19am BST

Royal Mail are missing out on today's rally, after reporting a drop in parcel deliveries as the economy emerged from lockdown.

For Royal Mail, as expected, parcel volumes decreased and letter volumes increased compared to the exceptional period last year encompassing the UK's first lockdown, when non-essential retailers closed for the first time.

We are starting to see evidence that the domestic parcel market is re-basing to a higher level than pre-pandemic, as consumers continue to shop online.

Positive company news lifts markets, Next smashes expectations and Royal Mail hit by parcels volume decline@AJBell https://t.co/EHMBQtpXp2 #PressRelease pic.twitter.com/2jtdqOpYau

11.15am BST

Next has hiked its profit guidance for the third time in four months after shoppers flocked back to stores after reopening, as it profited from pent-up demand for clothing.

The clothing and homeware retailer's full-price sales soared by almost 19% during the 11 weeks to 17 July, compared with the same period in 2019.

10.03am BST

Shops in Northern Ireland will have gaps on the shelves when the grace period in the Brexit protocol ends, the chair of Marks & Spencer has warned.

Ahead of a government statement on the issue, Archie Norman said the retailer was already planning not to supply some Christmas products to Northern Ireland because of the risk that fresh food will be impeded under forthcoming arrangements.

9.31am BST

#FTSE 100 top risers: #NXT Next +10.22%#CPG Compass Group +4.92%#IAG International Consolidated Airlines +3.51%#RR Rolls Royce Holdings +3.09%

#FTSE 100 top fallers: #RMG Royal Mail -1.73%#AVST Avast -1.53%#AAL Anglo American-0.66%#FRES Fresnillo -0.65%

9.10am BST

All the main European indices are higher too:

9.00am BST

Stock markets are rebounding strongly now, as investors shake off some of their worries that the pandemic will hit the global recovery.

The FTSE 100 index is now up 104 points, or 1.5%, at 6985 -- meaning it's now clawed back much of Monday's tumble (the worst in two months).

An uptick in US ten-year Treasury yields suggests some easing of concerns over the economic impact from recent virus resurgences, although it remains a key risk to watch.

Some optimism may arise among investors as further spreads of virus cases support the Fed's accommodative policy stance to last for longer and ease previous concerns on policy tightening, ahead of the Fed meeting next week. While the financial sector is gaining traction from the rise in yields, the industrials sector may be drawing strength from updates over the US infrastructure spending bill negotiations.

8.51am BST

Rishi Sunak is poised to usher in cuts to public services of up to 17bn compared with the government's pre-pandemic plans unless he takes action this summer to increase funding, a leading thinktank has warned.

The Institute for Fiscal Studies said the government was on track to spend between 14bn and 17bn less each year on a range of public services from April 2022 than had been earmarked prior to Covid-19.

8.50am BST

Today's borrowing figures are timely reminder' of the impact of rising inflation, says Danni Hewson, AJ Bell financial analyst:

Government borrowing is going down and tax receipts are going up; that equation is proof if it were needed that the lifting of restrictions is powering the economy forward. But it's not all good news, not by a long shot. Government spending actually increased by 2.5bn in June compared to the June 2020 with falling furlough costs offset by spending on vaccines and the test and trace programme as well as interest payments on the debt pile.

That figure of 8.7bn, up by a whopping 6bn from the same month last year, is the highest since records began in April 1997. It's a timely reminder of the impact inflation can have with the hikes in interest down to gilts pegged to RPI increases.

Though the tax take is still falling short of what's needed for day to day spend it is increasing month by reopened month. More journeys, more consumer spend, and a frankly sizzling housing market are adding to the pot.

With schemes like furlough and the stamp duty holiday winding down, the Treasury's calculators will be out and waiting to assess whether changes will bring a boost to fortunes or dampen the mood entirely."

8.17am BST

Shares in travel, holiday and hospitality firms are also higher this morning, after hefty falls on Monday:

European movers:

Next +10%
Evolution Gaming +8%,
Vallourec +6%
Compass Group +4.9%
Orpea +4.9%
easyJet +3.6%
IAG +3.6%
ASML +3.4%
Tui +3.3%
Sodexo +3.1%
Accor +3.1%
Nordea +3%
Novartis +1.3%
Daimler -3.3%
Akzo Nobel -3%,
Telia -3%
Ubisoft -2.3%
SAP -2.1%
Royal Mail -2.1%

8.16am BST

In the City, the FTSE 100 index has jumped by 51 points or 0.75% to 6932 points.

8.02am BST

Despite the drop in borrowing (compared with last year), chancellor Rishi Sunak still faces a tricky spending review this autumn, the Institute for Fiscal Studies warns:

NEW: @RishiSunak faces a cacophony of calls for additional spending for the NHS, social care, and much else besides.

What do today's borrowing numbers and the changing economic outlook mean for the Spending Review?

Thread on our new briefing note with @NuffieldFound @Citi [1/7] pic.twitter.com/vHjg0aiL13

Government borrowing on a 12-month rolling basis has begun to fall from its record high of 14.2% of GDP, according to data released today by the @ONS.

This reflects an improvement in the near-term economic outlook - but will it persist? [2/7]https://t.co/HwVyJ0B0nA pic.twitter.com/iXzkDWjLks

Under Citi's latest forecast, the post-COVID recovery is faster, but does not end up being more complete due to permanent economic damage from the pandemic. By the mid-2020s, the cash size of the economy is expected to be 3% smaller than under official pre-COVID forecasts.

[3/7] pic.twitter.com/dbv9cxHYLs

Despite a short-term improvement in the borrowing figures, under our forecast the Chancellor would have virtually no additional headroom against his target for medium-term current budget balance - leaving little to no space for permanent giveaways at the Spending Review.

[4/7] pic.twitter.com/tDDeLVzb4h

In fact, the Chancellor is set to borrow an amount in 2025-26 not dissimilar to what was forecast in March and slightly more than was forecast pre-pandemic - despite a cut to spending plans & the biggest tax-raising Budget since Lord Lamont's 1993 Spring Budget.

[5/7] pic.twitter.com/g446ANxQVu

.@RishiSunak has cut back his plans for spending on day-to-day public services by up to 17 billion each year relative to what was planned pre-pandemic, despite new COVID-related pressures: some future top-ups seem inevitable. [6/7]https://t.co/HwVyJ0B0nA pic.twitter.com/RUIgJ4MylY

This sets the stage for a tricky Spending Review later in the year.

Read our full briefing, launching our #IFSGreenBudget with support from @NuffieldFound and @Citi > https://t.co/HwVyJ0B0nA

[END OF THREAD: 7/7] pic.twitter.com/TeGDBcgjgG

7.57am BST

Here's Sky's News' take on today's UK borrowing figures.

Britain spent a record 8.7bn in interest payments on central government debt last month, official figures show.

COVID-19: Record 8.7bn spent paying interest on soaring government debt last month https://t.co/lCAj9qhCjy

7.54am BST

The jump in debt interest payments to a record 8.7bn last month won't derail the deficit reduction, says Michal Stelmach, senior economist at KPMG UK.

But it does show the risks that higher inflation poses, as a large chunk of UK government debt is linked to the RPI inflation measure.

Public sector net borrowing was 22.8bn in June, down compared with the previous year but still significantly higher than the pre-pandemic June average of 6bn.

Debt interest spending rose by 6bn on the previous year to its highest level on record. It reflected a surge in RPI inflation in April, which feeds through to payments on index-linked gilts with a two-month lag. The volatility of debt interest spending underscores its sensitivity not just to inflation but also to interest rates, which can rapidly change the path of fiscal sustainability.

7.47am BST

The drop in government borrowing in June shows that the economic recovery is feeding through the public finances.

It shows that a growing economy can do more of the job in fixing" the public finances than a fiscal tightening, says Ruth Gregory of Capital Economics .

Total tax receipts of 62.2bn in June were well above May's (upwardly revised) 59.5bn and last June's 52.7bn. And the trend in tax receipts should continue to improve over the rest of the year as stronger GDP growth than anticipated by the OBR boosts the public coffers.

However, current expenditure jumped from 75.8bn in May to 77.9bn in June.That reflected an unexpected rise in spending on the furlough scheme (2.2bn in June, up from 1.9bn in May). And the rise in RPI inflation in April 2021 meant that debt interest payments rose by 8.7bn. That was the highest monthly payment since the series began in 1997.

7.46am BST

Some debt history:

UK borrowing since 1900> pic.twitter.com/Bt7bktVGJz

7.40am BST

Economist Julian Jessop points out that UK government borrowing is running below forecast this year....

UK government #borrowing of 22.8bn in June marginally above market expectations of about 21.5bn, but still coming in below the OBR's latest estimates.

2020/21 borrowing also revised down again - by 1.5bn. pic.twitter.com/t6rN8oJzW6

Interest payments on central government debt jumped to 8.7 billion in June, largely due to impact of #inflation on cost of index-linked gilts.

Higher inflation partly reflects a stronger economy and can be good for the public finances overall, but this is one of the downsides.

7.33am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

UK government borrowing fell in June as the economy continued to recover from the shock of the pandemic.... but the interest payments on the national debt were pushed up by rising inflation.

Public sector net borrowing excluding public sector banks was 22.8 billion in June 2021.

This was the second-highest June borrowing since monthly records began in 1993, but 19.4% (5.5 billion) less than in June 2020 https://t.co/C2auqPO2iB pic.twitter.com/26nSiTP3Wu

Central government receipts in June 2021 were estimated to have been 62.2 billion, a 9.5 billion (or 18.0%) increase compared with June 2020. Of these receipts, tax revenues increased by 8.1 billion (or 21.7%) to 45.5 billion.

Central government departments spent 31.1 billion on goods and services in June 2021, an increase of 1.7 billion (or 5.7%) including 17.7 billion on procurement and 12.8 billion in pay.

This cost includes the expenditure by the Department of Health and Social Care (DHSC), devolved administrations and other departments in response to the coronavirus pandemic including the NHS Test and Trace programme and the cost of vaccines.

Public sector net debt excluding public sector banks was 2,218.2 billion at the end of June 2021 or around 99.7% of GDP.

This is the highest ratio since the 102.5% recorded in March 1961 https://t.co/ebDHHWdOCE pic.twitter.com/XSIxosbK9D

The interest related to the 470.7 billion index-linked gilts in circulation (at redemption value) increased by 6.0 billion in June 2021 compared to June 2020, mainly as a result of the large increase in the RPI between March and April 2021 impacting on the uplift of the three-month lagged index-linked gilts.

Interest payments on central government debt were a record breaking 8.7 billion in June 2021, a 6.0 billion increase compared to a year earlier which was mainly due to fluctuations in the RPI to which index-linked gilts are pegged. pic.twitter.com/Ka7yJKgIj7

June's additional accrued debt interest expenditure will not be reflected in the central government net cash requirement in the near term, this movement reflects an increase in the government's liabilities which will be realised as the existing stock of index-linked gilts redeem.

European Opening Calls:#FTSE 6891 +0.15%#DAX 15243 +0.18%#CAC 6373 +0.41%#AEX 723 +0.19%#MIB 24200 +0.38%#IBEX 8383 +0.29%#OMX 2307 +0.15%#STOXX 3967 +0.27%#IGOpeningCall

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