Public finances put chancellor in the spotlight
CHANCELLOR George Osborne will be under the spotlight again this week, with the release of the UK’s public finance figures for August.
Last month’s shock news – that the deficit grew by £600m rather than falling by £2.8bn in July – means Friday’s figures will give an even clearer indication of whether the government can meet its yearly target for cutting borrowing.
“So far this fiscal year, the deterioration in demand has caused the public finances to suffer, said Philip Rush, a Nomura economist.
“We expect that trend to moderate in August, after the sharp weakening in July. However, with the PSNB at £15.8bn ex-interventions (£13.4bn including them), borrowing would still be up on last year.”
Other economics news this week includes today’s release of the Rightmove house prices. In line with previous months, house prices continue to grow in the capital, while slightly decreasing year-on-year throughout the rest of England and Wales.
Tomorrow’s news includes retail price index and consumer price index figures for the UK.
Howard Archer, chief European economist at IHS Global Insight forecast August’s consumer price inflation would remain at 2.6 per cent – the same as July.
“July’s move back up in inflation marked at least a temporary reversal of the downward trend that had seen it moderate to a 31-month low of 2.4 per cent in June from a three-year high of 5.2 per cent in September 2011,” he said.
Meanwhile Samuel Tombs of Capital Economics predicted a fall to 2.4 per cent and Chris Scicluna of Daiwa Capital said he expected it to dip to 2.5 per cent.
Archer predicted would retail sales would remain muted.
“Consumers still face serious headwinds that are limiting their willingness as well as their ability to spend.”
In terms of corporate news, tomorrow brings statements from Debenhams and Galliford Try. Wednesday sees figures for Smiths Group and Redrow and interim reports or trading announcements from French Connection, Paragon Entertainment, ASOS and PZ Cussons. On Thursday Moss Bros, M&C Saatchi, Imperial Tobacco and Ocado are all set to update the market.