The U.K. Treasury said its 1987/88budget arithmetic which was unveiled on Tuesday "took full
account of likely proceeds" from the sale of the government's
remaining 31.7 pct stake in British Petroleum Co PLC (BP.L).
    A statement issued by the Treasury said "the BP announcement
therefore makes no difference to our estimate of privatisation
proceeds in 1987/88, or to subsequent years, which remains 5.0
billion stg a year."
    "It makes no difference to the PSBR (Public Sector Borrowing
Requirement) which the Chancellor set in the budget," it said.
    "It has nothing to do with the future scope for tax cuts."
    The Treasury's move was prompted by press speculation,
officials said, which followed last night's surprise
announcement by the government. It currently holds about 578.5
mln shares in BP.
    The Treasury statement said that the sell-off "is simply a
part of the government's continuing privatisation programme,
the overall size of which was announced in the Autumn
(economic) Statement" (last November).
    It said the BP proceeds "will be received in installments,
of which the first will be in 1987/88."
    News of the privatisation weighed down both BP's share
price in London and the equity market overall, market sources
said.
    The prospect of so much more BP paper in circulation had
cut BP shares at 1340 GMT to 824 pence from yesterday's London
close of 828 pence. The company's shares had been down as low
as 802 pence before rebounding, stock market sources said.
    Worries over the ability of the London stock market to
digest the BP and other privatisation issues sent the Financial
Times/Stock Exchange 100 Share Index down 9.1 points by 1340
GMT to 1997.5 from last night's close. At one point the index
was as low as 1989.1, the sources said.
 REUTER
