The FTSE 100 opened 0.1% higher at 10,751.54 on Tuesday, as investors looked past further signs of pressure on the UK’s public finances.
The FTSE 250 also gained 0.1% to 24,502.53, with sentiment supported by the recent retreat in oil prices and stronger global technology markets.
The Office for National Statistics reported public-sector borrowing of £18.3 billion in August, £2.9 billion more than a year earlier and £3.5 billion above the Office for Budget Responsibility’s forecast.
Borrowing during the financial year to August reached £77.3 billion. Although £2.2 billion lower than during the same period last year, it was £8.1 billion above the OBR projection, increasing pressure on the government ahead of the Autumn Budget.
The weaker fiscal position raises questions over the scope available for tax cuts, additional spending or other Budget measures, while potentially increasing the amount of government borrowing required.
Elsewhere, gold slipped to around $4,326 an ounce as investors moved towards riskier assets, while sterling strengthened modestly to approximately $1.338 against the dollar.
For investors, the immediate focus remains on whether deteriorating public finances translate into higher gilt issuance, tighter fiscal policy or additional tax measures, even as lower oil prices and improved global risk appetite support UK equities.
