London pre-open: Stocks seen flat; borrowing exceeds expectations

The FTSE 100 was called to open unchanged at 8,702.

Data released earlier by the Office for National Statistics showed the government borrowed £10.7bn in February. 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.

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."

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 will also be waking up to news that London’s Heathrow airport is closed until midnight 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, officials said.

Flights already enroute to the west London airport were forced to divert, according to the specialist website Flightradar24.

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

In corporate news, pub owner JD Wetherspoon 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 said in an update 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.