London midday: Stocks extend losses after borrowing data; Heathrow closure hits airlines

London stocks had extended losses by midday on Friday as data showed that UK borrowing significantly overshot expectations in February, with airlines weaker as Heathrow was forced to shut after a fire at a substation caused a power outage.

The FTSE 100 was down 0.4% at 8,663.49.

Figures from the Office for National Statistics showed the government borrowed £10.7bn in February, up £100m on the same month last year.

This was the fourth highest figure on record for that month and well above the Office for Budget Responsibility’s forecast of £6.5bn. It was also above economists’ forecasts of £7bn.

Borrowing is the difference between what the government spends on the public sector and what it gets in income from tax and other receipts.

For the year to February, borrowing came in at £132.2bn, up £14.7bn on the same period a year earlier.

Jessica Barnaby, deputy director for public sector finances at the ONS, said: "At £10.7bn, public sector borrowing in the month of February was virtually unchanged on the same month last year. However, borrowing over the financial year to date was up nearly £15bn on the equivalent period last year."

Chancellor Rachel Reeves is due to deliver her Spring statement next week.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "UK Chancellor, Rachel Reeves, was already in a super-tight spot in terms of the public finances and she’s now facing a further squeeze.

"It cements expectations that Rachel Reeves will go further in tightening the public purse by cutting expenditure in the years to come. Official growth forecasts are expected to be slashed, which means that the tax take is also likely to shrink going forward. But given that stability is right at the cornerstone of the government’s agenda, this Chancellor’s not for turning, and won’t break her fiscal rules.

"The UK is not blessed with lower debt to GDP levels like Germany, which has enabled the country into lifting its borrowing brake. The government will be in a bind as it deals with incoming trade disruption, with limited room for manoeuvre."

Investors were also digesting news that London’s Heathrow airport is closed until midnight GMT after a fire at an electricity substation in the local area caused a "significant" power outage, hitting more than 1,000 slights and 16,000 homes.

Flights that were already enroute to the west London airport were forced to divert, according to the specialist website Flightradar24. Video footage shows an enormous blaze at the substation in Hayes, west London.

Passengers have been told not to travel to the airport “under any circumstances” and warned “significant disruption” is expected in the coming days.

British Airways, which had 341 flights scheduled to land at Heathrow on Friday, said the fire would "clearly have a significant impact on our operation and our customers, and we are working as quickly as possible to update them on their travel options for the next 24 hours and beyond”.

Airlines fell sharply at the open but had pared losses somewhat by midday, with with BA and Iberia owner IAG down 1% and easyJet down 0.7% Hotel chain IHG was nearly 3% lower.

JD Sports was the biggest loser on the FTSE 100, however, after a disappointing update from Nike.

Pub owner JD Wetherspoon tumbled as it reinstated its interim dividend after a solid increase in first-half underlying sales, but warned of the impact of rising labour costs on the business, which will hit each of its pubs by £1,500 per week.

Chair Tim Martin said that increases in national insurance contributions and minimum wages, announced in the last Budget, would increase company costs by £60m a year.

Ferrexpo slid as it said that Ukrainian tax authorities have suspended VAT refunds totalling UAH 512.9m ($12.5m) for January to its subsidiaries FPM and FYM, citing personal sanctions on major shareholder Kostiantyn Zhevago.

The FTSE 250 company said the sanctions were not directed at Ferrexpo or its subsidiaries, and criticised the move as unjustified financial pressure.

It said the suspension would strain its liquidity, forcing cuts to production and sales, with broader negative impacts on local procurement, tax contributions, and Ukraine’s economy.

On the upside, Sainsbury’s edged up on the back of an upgrade to ‘buy’ from ‘hold’ at HSBC.

Gas producer Energean gained after saying it has pulled its $945m deal to sell some of its assets to private equity fund Carlyle due to pending regulatory approvals in Italy and Egypt.

Housebuilder Crest Nicholson rallied after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets.

Asos surged after the online fashion retailer lifted its profit outlook for the first half.

Market Movers

FTSE 100 (UKX) 8,663.49 -0.44%
FTSE 250 (MCX) 19,997.94 -0.50%
techMARK (TASX) 4,742.24 -0.44%

FTSE 100 - Risers

Melrose Industries (MRO) 550.00p 2.54%
Vodafone Group (VOD) 75.68p 1.67%
3i Group (III) 3,731.00p 1.14%
Hiscox Limited (DI) (HSX) 1,178.00p 1.12%
Rentokil Initial (RTO) 346.80p 0.93%
Coca-Cola HBC AG (CDI) (CCH) 3,494.00p 0.92%
Sainsbury (J) (SBRY) 238.80p 0.76%
Compass Group (CPG) 2,425.00p 0.71%
HSBC Holdings (HSBA) 881.00p 0.56%
Pershing Square Holdings Ltd NPV (PSH) 3,816.00p 0.53%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 76.32p -4.38%
Antofagasta (ANTO) 1,838.50p -3.72%
Croda International (CRDA) 2,927.00p -3.62%
CRH (CDI) (CRH) 7,378.00p -2.82%
InterContinental Hotels Group (IHG) 8,338.00p -2.75%
Glencore (GLEN) 302.00p -2.58%
Entain (ENT) 649.80p -2.32%
Barclays (BARC) 295.85p -2.05%
Mondi (MNDI) 1,220.50p -2.05%
Anglo American (AAL) 2,279.50p -2.02%

FTSE 250 - Risers

Energean (ENOG) 879.50p 4.52%
Oxford Nanopore Technologies (ONT) 114.00p 4.01%
Crest Nicholson Holdings (CRST) 165.60p 1.72%
Harbour Energy (HBR) 204.70p 1.59%
QinetiQ Group (QQ.) 380.00p 1.44%
ITV (ITV) 81.00p 1.12%
Empiric Student Property (ESP) 82.90p 1.10%
Bloomsbury Publishing (BMY) 606.00p 1.00%
ICG Enterprise Trust (ICGT) 1,262.00p 0.96%
Discoverie Group (DSCV) 591.00p 0.85%

FTSE 250 - Fallers

Wetherspoon (J.D.) (JDW) 540.00p -9.55%
Ferrexpo (FXPO) 65.90p -7.31%
Essentra (ESNT) 106.00p -3.81%
Wood Group (John) (WG.) 42.52p -3.76%
Trustpilot Group (TRST) 233.00p -3.72%
Syncona Limited NPV (SYNC) 90.00p -3.54%
Aston Martin Lagonda Global Holdings (AML) 74.75p -3.49%
FirstGroup (FGP) 177.00p -2.75%
Raspberry PI Holdings (RPI) 544.00p -2.68%
B&M European Value Retail S.A. (DI) (BME) 266.30p -2.67%