Daily Market Report 22/08/16

GBP

Government income fell in July with tax receipts missing expectations in the first sign of a post-referendum hit to the public finances. The UK government ran a surplus of £977m in July, however it was lower than predictions for a £1.9bn windfall and less than the £1.2bn surplus clocked up in the same month last year.

The government's total debt fell over the month, and the debt-to-GDP ratio also dipped from 83.8 per cent this time last year to 82.9 per cent. In the aftermath of the EU referendum, the government abandoned its plans to balance the books by the end of the decade, with many analysts expecting the government's balance sheet to take a multi-billion pound hit as a result of weaker growth, and weaker income, due to Brexit uncertainty.

Prime Minister Theresa May is still leaning toward the first part of 2017 as the best moment to trigger the start of formal talks over the U.K.’s withdrawal from the European Union, according to two British officials. While reports in the U.K. media recently suggested May could wait until the end of 2017 before opening two years of negotiations, she is sympathetic to the case for acting by April at the latest as Germany and France prepare for elections and pro-Brexit campaigners at home warn against delay, said the officials.

The chief Brexit negotiator, David Davis, and Trade Secretary Liam Fox are still in the process of hiring staff, while Fox and Foreign Secretary Boris Johnson have already disputed  the roles their departments will play. This news broke late on Friday and caused a sell-off in the pound in afternoon trading.