Pound falls and bond yields rise after UK borrowing soars
This morning’s UK public finances are going down badly in the City.
The pound has dropped by half a cent this morning, to $1.35. That puts sterling on track for its third daily fall in a row, as it drops back from Tuesday’s two-month high.
Government bonds are under pressure too, as traders react to the news that borrowing is £11bn higher than forecast so far this year.
The yield, or interest rate, on 10-year UK gilts (bonds) is up 4 basis points at 4.7% (up from 4.66% last night).
30-year gilt yields have also risen by 4bps, to 5.54%.
Kathleen Brooks, research director at XTB, says today’s public finance data puts the sustainability of borrowing and the size of UK state into question:
The pound has sunk on this data, and is testing support at $1.3500, it is the second worst performing currency in the G10 FX space today, and is lower by 0.33% vs. the USD. The UK’s bond market is extremely fragile, 10-year and 30-year yields rose sharply on Thursday, although global long end yields were higher, the UK was the weakest performer across Europe and the US.
UK bond yields could rise further on this news, especially as the Bank of England is maintaining its ‘careful and gradual’ approach to loosening monetary policy. Although the BOE has reduced the amount of bonds that it is offloading from its balance sheet, especially long end bonds, they are still shrinking their balance sheet albeit at a slower pace. Thus, the BOE cannot be relied on to relieve pressure on the long end of the Uk Gilt curve.
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Closing post
Time to wrap up….
UK government borrowing rose to a five-year high in August, official figures show, fuelling growing expectations for Rachel Reeves to raise taxes at the autumn budget and knocking the pound.
Figures from the Office for National Statistics (ONS) showed public sector net borrowing – the difference between public spending and income – rose to £18bn in August, £3.5bn more than in the same month a year earlier.
Dealing a blow for the chancellor as she prepares for the 26 November budget, the reading was above City predictions for a deficit of £12.75bn and forecasts from the Office for Budget Responsibility (OBR) of £12.5bn.
A chart showing UK government borrowing
On top of upward revisions to previous months, total borrowing for the financial year to date jumped to £83.8bn, also the highest level since the height of the Covid pandemic in 2020. The total was £16bn higher than in 2024 and above a £72.4bn forecast from the OBR.
Sterling has slid through the day, and is now down over three-quarters of a cent against the US dollar at $1.3475.
Economists have predicted that fresh tax rises will be announced in the autumn budget.
In other news:
ShareTrump: Xi call was ‘very productive’
Donald Trump has declared that his call with Xi Jinping was “very productive”, and revealed that the two leaders have agreed to visit each other’s countries.
Posting on Truth Social, Trump says:
I just completed a very productive call with President Xi of China. We made progress on many very important issues including Trade, Fentanyl, the need to bring the War between Russia and Ukraine to an end, and the approval of the TikTok Deal. I also agreed with President Xi that we would meet at the APEC Summit in South Korea, that I would go to China in the early part of next year, and that President Xi would, likewise, come to the United States at an appropriate time. The call was a very good one, we will be speaking again by phone, appreciate the TikTok approval, and both look forward to meeting at APEC!
We’ve not yet, though, heard confirmation from Beijing that the TikTok deal has been finalised…
After a day dominated by worries over the UK’s public finances, stocks have closed a little lower in London.
The FTSE 100 index of blue-chip shares has ended the day 11 points lower at 9216 points, which means its lost about 0.7% during this week.
Miners Fresnillo (+5.1%) and Endeavour (+5%) led the risers, while the London Stock Exchange Group (-5.7%) and WPP (-5.1%) were the top fallers.
The FTSE 250 index lost 0.6% today, with computing company Raspberry Pi (-5.8%) bottom of the pile.
Chinese President Xi Jinping said the US should avoid restrictive trade measures during his call today with US President Donald Trump, according to Xinhua News Agency.
That’s a sign that Beijing is looking to ease tensions between the world’s biggest economies.
However, there’s no immediate sign that the long-awaited TikTok deal has been agreed….
Bloomberg has more details:
Xi also told Trump that the Chinese government respects the wishes of businesses as they look to finalize an agreement on the sale of the US operations of ByteDance Ltd.’s social video app TikTok and would like to see those companies find a resolution to the issue, according to the readout from Xinhua.
The official Chinese news agency characterized the talks as positive and pragmatic and said Xi had expressed confidence that Washington and Beijing could handle issues that arise between the countries, while also suggesting that the US offer a fair environment for Chinese companies to do business.
Wall Street’s main indexes have nudged a little higher in early trading.
The Nasdaq has touched a fresh intraday record, as the tech stock rally continues.
And parcel delivery firm FedEx has jumped by 2.5%, after reporting stronger than forecast quarterly profits and revenues yesterday.
The week is ending on a low note for advertising giant WPP.
WPP’s shares are down around 4% in afternoon trading, and have hit their lowest level since 2009.
WPP’s shares have dropped this week during a gloomy few days for the ad industry. Rival S4 Capital (run by WPP’s former supremo, Sir Martin Sorrell) reported falling sales and widening losses on Monday, warning that nervous customers were spending less on marketing.
M&C Saatchi gave a similar warning yesterday, saying it expects revenues to fall this year and citing client caution and delayed project spending relating to macroeconomic woes.
ShareSEC chair backs Trump’s call to end quarterly reporting (despite concerns)
America’s financial watchdog has heeded Donald Trump’s call to relieve US companies from the burden of updating investors every quarter.
Paul Atkins, chairman of the U.S. Securities and Exchange Commission, said today his agency will propose a rule change following President Donald Trump’s call to switch quarterly earnings reports to a semiannual schedule.
Atkins told CNBC’s “Squawk Box” show today:
“I welcome that posting by the president, and I have talked to him about it. In principle, I think to propose change in what our rules are now, I think would be a good way forward, and then we’ll consider that and move forward after that.”
Atkins said if the rule change is approved, it will be left to companies to decide whether they switch to semiannual or stay with quarterly.
He added:
“For the sake of shareholders and public companies, the market can decide what the proper cadence is.”
SEC Chairman Paul Atkins told CNBC that he’s on board with President Donald Trump’s push for companies to end earnings reports on a quarterly basis.
Here’s what he said. ⬇️ https://t.co/wqb0cQhaSd
— CNBC (@CNBC) September 19, 2025
Earlier this week, Trump urged the Securities and Exchange Commission to shift away from requiring firms to report on a quarterly basis and instead adopt a semi-annual schedule.
The president argued that less frequent reporting would “save money, and allow managers to focus on properly running their companies”.
It might, indeed.
But it could also make it harder to spot when companies are being run badly, and make investors less informed about how firms are performing.
As Brooke Masters wrote in the FT this week:
Quarterly reporting itself has been a bedrock of US markets since 1970. Well-run companies use the requirement to update investors on their progress.
More troubled groups are forced to disclose potential legal and regulatory problems, which is more important in the US than in places like the UK and Germany where companies have a duty to inform the market quickly of material changes. That is one reason investor groups opposed Trump’s first tilt at quarterly reporting and are now raising concerns again.
Back in the City, shares in private healthcare group Spire Healthcare have jumped over 15% today.
Spire is leading the risers on the FTSE 250 index after it told investors it was in talks over “a range of potential options”, including a potential sale deal.
Spire is among the UK’s largest private healthcare businesses, running 38 hospitals and more than 50 clinics across England, Wales and Scotland.
The company said it is working with advisers from Rothschild & Co to review its options and has now held “discussions with a number of parties”.
“This process is highly preliminary and no decision has been made regarding whether any such option will be pursued at this stage,” the company said.
It added that it has not yet received any approaches regarding a takeover deal.
Sir Ian Cheshire, chairman of Spire, said:
“In July we made clear that the Board believed that Spire was undervalued by the market given its strategic progress and property underpin, and that we would continue to actively evaluate and implement any appropriate action that drives long term shareholder value.
“To that end, the board decided to appoint Rothschild to assess a range of options, which may include a potential sale of the company.
“At the same time, we remain focused on delivering both our strategy and outstanding personalised care for our patients.”
The move follows pressure from major investors for Spire to look at a sale in order to secure returns for its shareholders.
ShareTrump and Xi ‘hold phone call’
US president Donald Trump is holding a call with Chinese leader Xi Jinping today.
According to the Xinhua news agency, “Chinese President Xi Jinping on Friday held phone talks with U.S. President Donald Trump”.
It will be the first time the pair have spoken since June.
Trump said to reporters yesterday that they’ll focus on TikTok and trade on their call, saying:
“We’re very close on all of it.”
Earlier this week, Washington and Beijing struck a framework agreement on transferring TikTok to US-controlled ownership.
However, there have been suggestions from China that Beijing would retain control of the algorithm that powers the site’s video feed.
Our US Politics Live blog is will be tracking events:
Weaker-than-expected tax receipts this financial year are pushing UK borrowing higher than expected.
The Office for Budget Responsibility has explained today that central government accrued receipts in the first five months of 2025-26 were £6.1bn below forecast, while spending is pretty much in line with expectations.
Monthly HMRC cash receipts were £4.1bn less than expected in August.
According to the OBR:
Cash VAT receipts were £12.8bn in August, £3.2bn below forecast
PAYE income tax and NICs cash receipts were £36.8bn in August, is very close to forecast
Self-assessed (SA) income tax and capital gains tax cash receipts were £1.5bn in August, which is £500m below forecast.