London open: Stocks fall after borrowing data; airlines hit by Heathrow closure

London stocks fell in early trade on Friday as data showed that UK borrowing significantly overshot expectations in February, with airlines in the red as Heathrow was shut after a fire caused a power outage.

At 0820 GMT, the FTSE 100 was down 0.2% at 8,680.93.

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.

Alex Kerr, UK economist at Capital Economics, said: "Ultimately, today’s release will have no influence on how much the Chancellor needs to tighten fiscal policy at next week’s fiscal update. Higher gilt yields and the weaker economy have probably wiped out the Chancellor’s headroom of £9.9bn.

"And in order to restore that buffer, on top of the £5.0bn of welfare cuts already announced, we think she will cut non-defence departmental spending by around £6.5bn."

Investors were also waking up to 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".

Unsurprisingly, airlines were under the cosh, with BA and Iberia owner IAG, easyJet and Wizz Air all down.

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

Pub owner JD Wetherspoon slumped 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 rose 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) 8,680.93 -0.24%
FTSE 250 (MCX) 20,010.62 -0.43%
techMARK (TASX) 4,747.40 -0.33%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 238.60p 0.68%
HSBC Holdings (HSBA) 881.20p 0.58%
F&C Investment Trust (FCIT) 1,108.00p 0.54%
3i Group (III) 3,706.00p 0.46%
Rolls-Royce Holdings (RR.) 800.00p 0.43%
Standard Chartered (STAN) 1,172.00p 0.26%
Shell (SHEL) 2,756.50p 0.25%
SSE (SSE) 1,572.00p 0.22%
Imperial Brands (IMB) 2,725.00p 0.15%
National Grid (NG.) 995.20p 0.14%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 77.10p -3.41%
International Consolidated Airlines Group SA (CDI) (IAG) 281.10p -3.27%
Pearson (PSON) 1,172.00p -2.13%
Croda International (CRDA) 2,982.00p -1.81%
Entain (ENT) 653.40p -1.77%
Bunzl (BNZL) 2,948.00p -1.73%
easyJet (EZJ) 481.70p -1.69%
InterContinental Hotels Group (IHG) 8,432.00p -1.66%
Mondi (MNDI) 1,225.50p -1.65%
Antofagasta (ANTO) 1,878.50p -1.62%

FTSE 250 - Risers

Oxford Nanopore Technologies (ONT) 112.80p 2.92%
Target Healthcare Reit Ltd (THRL) 96.50p 2.88%
Mobico Group (MCG) 65.00p 2.36%
Crest Nicholson Holdings (CRST) 166.00p 1.97%
Foresight Solar Fund Limited (FSFL) 83.00p 1.72%
Primary Health Properties (PHP) 97.00p 1.57%
Premier Foods (PFD) 186.00p 1.20%
Helios Towers (HTWS) 107.40p 1.13%
Murray International Trust (MYI) 271.00p 1.12%
Grafton Group Ut (CDI) (GFTU) 885.00p 1.00%

FTSE 250 - Fallers

Ferrexpo (FXPO) 65.80p -7.45%
Wetherspoon (J.D.) (JDW) 570.00p -4.52%
CMC Markets (CMCX) 203.00p -3.79%
Indivior (INDV) 732.00p -3.49%
Wood Group (John) (WG.) 42.78p -3.17%
Trustpilot Group (TRST) 235.00p -2.89%
Ninety One (N91) 146.30p -2.73%
Burberry Group (BRBY) 865.20p -2.30%
Quilter (QLT) 152.70p -2.18%
Victrex plc (VCT) 944.00p -2.18%