London pre-open: Stocks seen up on solid Wall St session; UK borrowing in focus

(Sharecast News) - London stocks were set to rise at the open on Tuesday following a solid session on Wall Street, as investors mulled the latest UK borrowing figures.

The FTSE 100 was called to open 25 points higher.

Data released earlier by the Office for National Statistics showed that public sector borrowing in September hit its highest level for the month in five years.

Borrowing came in at �20.2bn, up �1.6bn on the same month a year earlier and the highest for September since 2020.

Borrowing in the financial year to September was �99.8bn, up �11.5bn on the same period a year earlier.

ONS chief economist Grant Fitzner said: "Last month saw the highest September borrowing for five years.

"Debt interest, the cost of providing public services and benefits all increased compared with last year, more than offsetting the rise in receipts from central government taxes and National Insurance contributions.

"Likewise, the first six months of the financial year saw the highest overall deficit since 2020."

Nabil Taleb, economist at PwC UK, said: "The Chancellor faces an increasingly difficult balancing act ahead of the Autumn Budget, with her fiscal headroom all but exhausted by a mix of weaker growth prospects, higher borrowing costs and rising spending pressures.

"An expected downgrade to the OBR's long-term growth forecasts will only add to the squeeze. Despite ruling out another �40 billion tax grab, fresh tax rises and spending cuts now look unavoidable as she tries to rebuild her �10 billion buffer. The IFS estimates she'll need to find around �22 billion to do so.

"A confident Budget may steady markets and lift consumer sentiment, but the UK's real challenge is raising productivity. The IMF expects the UK to be the second-fastest growing G7 economy this year, yet much of that growth comes from higher labour participation rather than genuine productivity gains. Until the UK starts adding more value, weak per-capita growth and mounting fiscal pressures will continue to persist."

In corporate news, consumer goods conglomerate Unilever has been forced to revise the timetable for its planned ice-cream unit demerger due to the ongoing US federal government shutdown which is stalling a legal registration needed to list its shares in New York.

The company said preparatory work for the demerger of the Magnum Ice Cream Company is "on track and progressing well", adding that it was "committed to and confident" of implementing the plan this year.

Coca-Cola HBC is to ramp up its presence in Africa after agreeing to acquire one of the brand's biggest bottling partners in a $2.6bn deal.

The London-listed firm is to buy a 75% stake in Coca-Cola Beverages Africa (CCBA) for $2.6bn, valuing the Johannesburg-based business a value at $3.4bn.

The deal will create the second-largest Coca-Cola bottling partner by volume globally, with leading positions across Africa and Europe, CCH said.

Drugmaker GSK made two key updates, with positive phase III trial results for tebipenem HBr, an investigational oral antibiotic for complicated urinary tract infections, and a favourable regulatory opinion for a new prefilled syringe format of its shingles vaccine, Shingrix.

GSK and partner Spero Therapeutics said the pivotal PIVOT-PO trial had demonstrated non-inferiority of oral tebipenem HBr versus intravenous imipenem-cilastatin in hospitalised patients with cUTIs, including pyelonephritis.

Separately, GSK said the European Medicines Agency's CHMP had issued a positive opinion supporting approval of Shingrix in a prefilled syringe format.