U.K. FTSE 350 firm deficits grow to $134 billion in July

The accounting deficit of FTSE 350 company pension funds grew 14.4% to £103 billion ($134.2 billion) for the month ended July 31.

Consultant Mercer's latest pensions risk survey showed assets were unchanged, vs. figures as of June 30, at £867 billion, while liabilities increased by 1.4% to £970 billion as of July 31. That gives a funded status of 89.4% vs. 90.6% as of June 30.

Mercer said the increase in liabilities was driven by falling bond yields. High-quality corporate bond yields were down to 1.37% as of July 31, vs. 1.45% as of June 30, data published by Mercer show. Market implied inflation was unchanged at 3.08%, while the FTSE All-Share Total Return index was down 3.6% over the month.

Deficits increased from £51 billion as of July 31, 2019. Assets grew 4.1% and liabilities were up 9.7%. The funded status as of July 31, 2019 was 94.2%.

"Pension scheme deficits worsened again in the last month and compared to 12 months ago, as market turmoil continues," Charles Cowling, chief actuary, said in a news release. "We may have reached the limit of the easing of lockdown measures ahead of any vaccine for coronavirus becoming available, and globally the outlook remains bleak with coronavirus cases increasing. In the U.K. many sectors are still operating in crisis mode and some experts predict it will be 2024 before the U.K. economy returns to normal."

Mr. Cowling added that the U.K. economy is expected to shrink by more than 10% this year as the country unwinds its furlough program, while unemployment could reach 10% by the end of the year.