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FTSE 100 slips back amid mounting concerns over record current account deficit

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Figures revealing that the economy grew faster than first thought in 2015 were overshadowed by the state of the nation’s finances, creating pressure for the London market.

According to official data, the current account deficit hit its highest level since records began, widening to £32.7 billion or 7% of gross domestic product (GDP) in the fourth quarter and 5.2% of GDP in 2015 as a whole.

After an almost 100-point rise on Wednesday, the FTSE 100 Index came down 27.9 points.

But deeper early session losses were helped as oil prices made a cautious rally back above £27.78 a barrel.

The focus was on the latest economic data from the Office for National Statistics (ONS), which saw a surprise upward revision for UK grow to 0.6% in the fourth quarter of last year, up from the previous estimate of 0.5%.

Growth for the whole of 2015 was also revised higher, to 2.3% from 2.2%.

Among stocks, Thomson and First Choice owner TUI was the biggest blue chip riser as it said UK holidaymakers returning to old favourites such as Spain in the wake of recent terror attacks helped grow bookings.

The German travel giant said summer bookings from British sunseekers jumped by 9% year on year, allowing it to stick to its guidance of boosting full-year earnings by at least 10%.

Its shares rose 5%, or 51p, to 1079p after it offered packages away from troublespots and saw “significant growth” in mainland Spain, the Balearic Islands and the Canary Islands.

Online electrical appliance retailer AO World was among the biggest risers in the second tier after upping its full-year outlook thanks to stronger-than-expected fourth quarter sales.

AO World is now expecting full-year underlying earnings to rise to about £17 million in the final three months to March, a figure higher than the £16 million pencilled in by the market.

Shares jumped as much as 15% at one stage, but later stood 5% or 7.9p higher at 180.7p.

Elsewhere, a consortium including outsourcing firm Secro has won a contract renewal from the Ministry of Defence to manage the UK’s nuclear warheads via the Atomic Weapons Establishment through to 2025. Shares in FTSE 250-listed Serco lifted 2% or 1.7p to 101p.

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Paul

The author Paul