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UK missing deficit target, as households grow gloomier about Brexit – business live UK missing deficit target, as households grow gloomier about Brexit – business live
(35 minutes later)
3.43pm GMT
15:43
Despite the better than expected eurozone consumer confidence figures, there is a chance the mood may not last, says economist Bert Colijn at ING Bank:
Eurozone consumers have good reason to cheer in November. The oil price fell sharply at the start of the month and Eurozone stock prices have gained on the Trump victory.
The unemployment rate has been flat over the summer months, but the employment outlook has been improving recently as companies are indicating to be hiring at a faster pace in both services and industry. This seems to have humoured the Eurozone consumer, who had been cautious through the summer months awaiting a negative Brexit response that has turned out to be mild so far.
The question is whether this momentum can continue to build in the coming months though. While some of the tailwind for the consumer is likely to be maintained, there are also factors that could bring the consumer down to earth. As inflation is likely to continue to increase in the coming months, real wages will probably take a hit before nominal wage growth edges up again.
And after a mild response to Brexit and the Trump election, will the Eurozone consumer respond more negatively to political uncertainty within the Eurozone? As a ‘no’ in the Italian referendum is ahead in the polls for the moment, it could well be that we will soon find out.
3.19pm GMT
15:19
The improved eurozone consumer confidence figures bode well for future growth in the region, says Howard Archer, chief European and UK economist at IHG Markit:
An encouraging boost to Eurozone growth prospects as consumer confidence rose for a third month running in November - and markedly - to reach an 11-month high. Furthermore, consumer confidence is now at a very decent level compared to long-term norms. Consumers across the Eurozone hare currently benefiting from pretty decent fundamentals overall, notably including higher employment and still very low inflation.
This buoys hopes that the Eurozone is on course for improved GDP growth in the fourth quarter after expansion was limited to 0.3% quarter-on-quarter in both the third and second quarters. We currently expect fourth-quarter GDP growth of 0.4% quarter-on-quarter and believe that 0.5% expansion is a genuine possibility. However, we have significant concerns over the Eurozone growth outlook for 2017 amid an uncertain political outlook.
While there are no details available, it seems reasonable suspect that the marked rise in Eurozone consumer confidence in November was due to improved perceptions on the economic situation and outlook. It is also likely that job concerns eased across the Eurozone after recently worsening. This was certainly true of both the Netherlands and Belgium, which have released their November surveys. Significantly, latest data showed that Eurozone unemployment dropped at an increased rate in September after labour markets had shown signs of faltering.
Any improvement in Eurozone consumer confidence – particularly a marked increase – is to be welcomed as the consumer clearly is vital to Eurozone growth prospects.
3.09pm GMT3.09pm GMT
15:0915:09
Eurozone consumer confidence beats forecastsEurozone consumer confidence beats forecasts
Back with the eurozone, and consumer confidence rose by more than expected in November, despite the continuing uncertainties of Brexit.Back with the eurozone, and consumer confidence rose by more than expected in November, despite the continuing uncertainties of Brexit.
The initial estimate for the eurozone rose by 1.9 points to -6.1 points, better than the forecast -7.8 points.The initial estimate for the eurozone rose by 1.9 points to -6.1 points, better than the forecast -7.8 points.
In the European Union as a while, confidence edged up by 0.7 points to -5.8. Dennis de Jong, managing director at UFX.com, said:In the European Union as a while, confidence edged up by 0.7 points to -5.8. Dennis de Jong, managing director at UFX.com, said:
EU consumer confidence hasn’t been in positive territory for nearly two decades so today’s negative reading is no surprise, but [ECB president] Mario Draghi will be pleased to see the above expectations data is at least moving in the right direction.EU consumer confidence hasn’t been in positive territory for nearly two decades so today’s negative reading is no surprise, but [ECB president] Mario Draghi will be pleased to see the above expectations data is at least moving in the right direction.
Draghi deserves credit for maintaining a relatively stable eurozone economy at one of the most uncertain geopolitical times in memory.Draghi deserves credit for maintaining a relatively stable eurozone economy at one of the most uncertain geopolitical times in memory.
With the cloud of Brexit hanging over the future direction of the eurozone, in addition to volatile elections and referendums on the horizon that could add further uncertainty, holding firm is likely just what the doctor ordered.With the cloud of Brexit hanging over the future direction of the eurozone, in addition to volatile elections and referendums on the horizon that could add further uncertainty, holding firm is likely just what the doctor ordered.
UpdatedUpdated
at 3.10pm GMT at 3.12pm GMT
3.04pm GMT3.04pm GMT
15:0415:04
Some upbeat US economic news, with new home sales rising to their highest level in more than nine and a half years in October.Some upbeat US economic news, with new home sales rising to their highest level in more than nine and a half years in October.
The National Association of Realtors said sales rose 2% to an annual rate of 5.6m, with September’s figure revised up from 5.47m to 5.49m.The National Association of Realtors said sales rose 2% to an annual rate of 5.6m, with September’s figure revised up from 5.47m to 5.49m.
Analysts had expected a figure of 5.43m in October.Analysts had expected a figure of 5.43m in October.
Meanwhile the Richmond Federal Reserve composite manufacturing index came in at +4 in November, compared to -4 in October.Meanwhile the Richmond Federal Reserve composite manufacturing index came in at +4 in November, compared to -4 in October.
2.52pm GMT2.52pm GMT
14:5214:52
Maybe it will be louder at NYSE if/when Dow tops 20K. Some cheers just after Dow hit a new record. But nothing crazy. Now it's quiet again.Maybe it will be louder at NYSE if/when Dow tops 20K. Some cheers just after Dow hit a new record. But nothing crazy. Now it's quiet again.
2.34pm GMT2.34pm GMT
14:3414:34
Wall Street hits new highs as Dow reaches 19,000Wall Street hits new highs as Dow reaches 19,000
The surge in US markets - based on the recent strength of the oil price and hopes that Donald Trumps infrastructure plans will boost the economy - is continuing.The surge in US markets - based on the recent strength of the oil price and hopes that Donald Trumps infrastructure plans will boost the economy - is continuing.
The Dow Jones Industrial Average has breached 19,000 for the first time, touching 19007, before slipping back to 18,991, up 0.18%.The Dow Jones Industrial Average has breached 19,000 for the first time, touching 19007, before slipping back to 18,991, up 0.18%.
Both the Nasdaq Composite - up 0.37% - and the S&P 500 - 0.23% better - opened at new peaks.Both the Nasdaq Composite - up 0.37% - and the S&P 500 - 0.23% better - opened at new peaks.
UpdatedUpdated
at 2.35pm GMTat 2.35pm GMT
2.15pm GMT2.15pm GMT
14:1514:15
Over in the eurozone, and some good news from Portugal:Over in the eurozone, and some good news from Portugal:
#Portugal default probability drops as govt says made €2.1bn early repayment of IMF loans today that were due between Sep2018-Feb2019. pic.twitter.com/6ltC3wukIo#Portugal default probability drops as govt says made €2.1bn early repayment of IMF loans today that were due between Sep2018-Feb2019. pic.twitter.com/6ltC3wukIo
1.57pm GMT1.57pm GMT
13:5713:57
Oil slips back on new Opec deal doubtsOil slips back on new Opec deal doubts
The oil price has been rising in recent days on growing expectation that Opec might agree to limit output at its meeting next week, following an outline plan drawn up in Algiers in September.The oil price has been rising in recent days on growing expectation that Opec might agree to limit output at its meeting next week, following an outline plan drawn up in Algiers in September.
But as is always the case, it does not take much to dent the mood. Reuters is reporting that Iran, Iraq and Indonesia have doubts about the proposed output cut.But as is always the case, it does not take much to dent the mood. Reuters is reporting that Iran, Iraq and Indonesia have doubts about the proposed output cut.
So Brent crude, previously as high as $49.96m a barrel today is now down 0.59% at $48.61. And West Texas Intermediate is now down 0.56% at $47.97.So Brent crude, previously as high as $49.96m a barrel today is now down 0.59% at $48.61. And West Texas Intermediate is now down 0.56% at $47.97.
Prices reacting negatively to this comment as Iran and Iraq are amongst the top producing nations by size & shows fractions remain https://t.co/BKowhNs9yNPrices reacting negatively to this comment as Iran and Iraq are amongst the top producing nations by size & shows fractions remain https://t.co/BKowhNs9yN
1.37pm GMT1.37pm GMT
13:3713:37
A quick recap of the main pointsA quick recap of the main points
1) Britain is on track to blow past its budget forecasts for this year, despite cutting its borrowing in October by 25%.1) Britain is on track to blow past its budget forecasts for this year, despite cutting its borrowing in October by 25%.
The UK has now borrowed £48.6bn since April 2016, down from £54.2bn a year ago, but already close to the £55bn target for this current financial year (to March 2017).The UK has now borrowed £48.6bn since April 2016, down from £54.2bn a year ago, but already close to the £55bn target for this current financial year (to March 2017).
Economists believe it could overshoot the target by £10bn or more, underlining the weak state of the public finances.Economists believe it could overshoot the target by £10bn or more, underlining the weak state of the public finances.
The better news is that October’s deficit fell to £4.8bn, from £6.4bn a year ago, thanks to a rise in corporation tax receipts.The better news is that October’s deficit fell to £4.8bn, from £6.4bn a year ago, thanks to a rise in corporation tax receipts.
2) UK families are more pessimistic about the long-term impact of leaving the EU. A new survey showed that confidence fell across all ages and income groups in the last three months.2) UK families are more pessimistic about the long-term impact of leaving the EU. A new survey showed that confidence fell across all ages and income groups in the last three months.
3) British factories have reported a pick-up in orders, after a summer slowdown. However, many are also planning to hike prices to cover the slump in the pound.3) British factories have reported a pick-up in orders, after a summer slowdown. However, many are also planning to hike prices to cover the slump in the pound.
4) The pound’s decline since June has wiped out $1.5trn of UK wealth, according to Credit Suisse’s regular report:4) The pound’s decline since June has wiped out $1.5trn of UK wealth, according to Credit Suisse’s regular report:
Here is the world's skewed distribution of wealth in a single graphic https://t.co/o1d5e7plXk pic.twitter.com/mQr0opX6JmHere is the world's skewed distribution of wealth in a single graphic https://t.co/o1d5e7plXk pic.twitter.com/mQr0opX6Jm
1.25pm GMT1.25pm GMT
13:2513:25
Back in the City, the FTSE 100 is on track to close at its highest level since 10 November - the day after the US election.Back in the City, the FTSE 100 is on track to close at its highest level since 10 November - the day after the US election.
There’s a general rally in the markets today, as investors react to last night’s record close on Wall Street.There’s a general rally in the markets today, as investors react to last night’s record close on Wall Street.
Mining companies are still leading the charge, after Goldman Sachs announced that it is now bullish about commodity prices. That helped send the copper price up to a one-week high.Mining companies are still leading the charge, after Goldman Sachs announced that it is now bullish about commodity prices. That helped send the copper price up to a one-week high.
Chris Beauchamp of IG says traders are jumping on board the rally before New York’s stock market closes on Thursday for Thanksgiving:Chris Beauchamp of IG says traders are jumping on board the rally before New York’s stock market closes on Thursday for Thanksgiving:
The week before Thanksgiving is never a good time to be short, since those of a bearish disposition tend to suffer a fate akin to a roasted turkey. Goldman Sachs’ decision to turn into commodity bulls has bolstered the London mining community, aside from precious metals miners, with the investment bank remaining downbeat on the outlook for gold.The week before Thanksgiving is never a good time to be short, since those of a bearish disposition tend to suffer a fate akin to a roasted turkey. Goldman Sachs’ decision to turn into commodity bulls has bolstered the London mining community, aside from precious metals miners, with the investment bank remaining downbeat on the outlook for gold.
And the party could continue today, with the US markets expected to rise at the open (in about one hour’s time).And the party could continue today, with the US markets expected to rise at the open (in about one hour’s time).
US Opening Calls:#DOW 18990 +0.21%#SPX 2200 +0.11%#NASDAQ 4876 +0.38%#IGOpeningCallUS Opening Calls:#DOW 18990 +0.21%#SPX 2200 +0.11%#NASDAQ 4876 +0.38%#IGOpeningCall
12.14pm GMT12.14pm GMT
12:1412:14
UK households grow more pessimistic on long-term Brexit impactUK households grow more pessimistic on long-term Brexit impact
British households have become more gloomy about the long-term economic consequences of leaving the European Union.British households have become more gloomy about the long-term economic consequences of leaving the European Union.
Data firm Markit reports that 49.3% of people surveyed think Britain’s economic outlook over the next decade has worsened due to the Brexit vote, while 31% of survey respondents think prospects have improved.Data firm Markit reports that 49.3% of people surveyed think Britain’s economic outlook over the next decade has worsened due to the Brexit vote, while 31% of survey respondents think prospects have improved.
That means Markit’s index of long-term pessimism index has dropped to -18.4%, compared to -11.1% in August and just -3.5% in July.That means Markit’s index of long-term pessimism index has dropped to -18.4%, compared to -11.1% in August and just -3.5% in July.
However, people are a little more optimistic about short-term economic prospects; 12.4% of people expect the economy to fare better over the next six months, up from 11.8% in August.However, people are a little more optimistic about short-term economic prospects; 12.4% of people expect the economy to fare better over the next six months, up from 11.8% in August.
Markit also found that younger people are more pessimistic about the Brexit vote, while older people - who had initially been upbeat about the situation - are now less optimistic.Markit also found that younger people are more pessimistic about the Brexit vote, while older people - who had initially been upbeat about the situation - are now less optimistic.
And those with the lowest incomes have also become more anxious, having originally been the most optimistic about the impact of Brexit:And those with the lowest incomes have also become more anxious, having originally been the most optimistic about the impact of Brexit:
Chris Williamson, chief business economist at IHS Markit, says people are concluding that Brexit will have a higher economic cost than they first thought:Chris Williamson, chief business economist at IHS Markit, says people are concluding that Brexit will have a higher economic cost than they first thought:
“On average, people have become considerably more pessimistic about the impact of the decision to leave the EU on the economy over the next decade.“On average, people have become considerably more pessimistic about the impact of the decision to leave the EU on the economy over the next decade.
“Only those working in manufacturing have become more upbeat about the economy’s prospects, presumably seeing some benefit of the weaker pound in relation to boosting export performance. However, even here the number of people seeing Brexit to have boosted the economy’s prospects over the next ten years only narrowly exceeds those expecting to see a negative impact.“Only those working in manufacturing have become more upbeat about the economy’s prospects, presumably seeing some benefit of the weaker pound in relation to boosting export performance. However, even here the number of people seeing Brexit to have boosted the economy’s prospects over the next ten years only narrowly exceeds those expecting to see a negative impact.
More details here.More details here.
UpdatedUpdated
at 12.29pm GMTat 12.29pm GMT
11.45am GMT11.45am GMT
11:4511:45
UK factory order books improve, but price rises loomUK factory order books improve, but price rises loom
We have another gobbet of goodish news ahead of tomorrow’s autumn statement.We have another gobbet of goodish news ahead of tomorrow’s autumn statement.
British factory order books have improved to their best level since June’s EU referendum, according to the CBI’s monthly survey.British factory order books have improved to their best level since June’s EU referendum, according to the CBI’s monthly survey.
23% of manufacturers reported that their total order books are above normal, while 26% said they were below normal, giving a balance of -3%.23% of manufacturers reported that their total order books are above normal, while 26% said they were below normal, giving a balance of -3%.
This was above average, and back to the levels seen through the summer. It suggests the sector is stable, despite the uncertainty around Brexit.This was above average, and back to the levels seen through the summer. It suggests the sector is stable, despite the uncertainty around Brexit.
UK CBI Industrial Trends for November#GBP #GBPUSD pic.twitter.com/AekAapENUNUK CBI Industrial Trends for November#GBP #GBPUSD pic.twitter.com/AekAapENUN
But the survey also shows that firms expect to hike prices in the next few months, following the slump in the pound’s value since the Brexit vote. Food and drink manufacturers are particularly affected.But the survey also shows that firms expect to hike prices in the next few months, following the slump in the pound’s value since the Brexit vote. Food and drink manufacturers are particularly affected.
Rain Newton-Smith, CBI Chief Economist, says:Rain Newton-Smith, CBI Chief Economist, says:
“It’s good to see manufacturers’ overall order books at healthy levels, and the outlook for output growth remaining robust as we head into Christmas.“It’s good to see manufacturers’ overall order books at healthy levels, and the outlook for output growth remaining robust as we head into Christmas.
“But the weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector. On the flip side though, export orders remain above average.“But the weak pound is beginning to make its mark, and prices are expected to rise, especially in the food and drink sector. On the flip side though, export orders remain above average.
11.30am GMT11.30am GMT
11:3011:30
Bloomberg say today’s public finances are a “boost” to Philip Hammond ahead of tomorrow’s autumn statement.Bloomberg say today’s public finances are a “boost” to Philip Hammond ahead of tomorrow’s autumn statement.
But... it won’t spare the chancellor from announcing weaker growth and higher borrowing forecasts:But... it won’t spare the chancellor from announcing weaker growth and higher borrowing forecasts:
UK borrows less than forecast in pre-budget boost for Hammond https://t.co/PsAVAQyUCb pic.twitter.com/tMjEwvOPfVUK borrows less than forecast in pre-budget boost for Hammond https://t.co/PsAVAQyUCb pic.twitter.com/tMjEwvOPfV
UpdatedUpdated
at 11.31am GMTat 11.31am GMT
11.14am GMT11.14am GMT
11:1411:14
Here’s our news story about today’s public finances:Here’s our news story about today’s public finances:
11.12am GMT11.12am GMT
11:1211:12
This chart highlights how Britain has made little progress in cutting the deficit this financial year:This chart highlights how Britain has made little progress in cutting the deficit this financial year:
Public finances had a good month in October. Not good enough though pic.twitter.com/GVLjH6IBriPublic finances had a good month in October. Not good enough though pic.twitter.com/GVLjH6IBri
10.53am GMT10.53am GMT
10:5310:53
Today’s figures show that the pace of deficit reduction is “frustratingly slow”, says Martin Beck, senior economic advisor to the EY ITEM Club.Today’s figures show that the pace of deficit reduction is “frustratingly slow”, says Martin Beck, senior economic advisor to the EY ITEM Club.
He agrees that the UK government has fallen behind its deficit reduction plan, despite cutting borrowing by £1.6bn in October to £4.8bn.He agrees that the UK government has fallen behind its deficit reduction plan, despite cutting borrowing by £1.6bn in October to £4.8bn.
Beck says:Beck says:
“The stronger October outturn and some favourable revisions to prior months meant that borrowing was £5.6bn lower than a year earlier over the first seven months of fiscal year 2016-17. But this still leaves the Government behind schedule in terms of achieving the OBR’s full year forecast. If this trend continues over the remaining five months of the year then borrowing would overshoot by around £11bn.“The stronger October outturn and some favourable revisions to prior months meant that borrowing was £5.6bn lower than a year earlier over the first seven months of fiscal year 2016-17. But this still leaves the Government behind schedule in terms of achieving the OBR’s full year forecast. If this trend continues over the remaining five months of the year then borrowing would overshoot by around £11bn.
In reality the situation is probably a little less bleak, as forestalling associated with the pre-announced increase in dividend tax should cause a sharp rise in self-assessment income tax receipts in the first couple of months of 2017. But even allowing for this, Public Sector Net Borrowing (PSNB) looks set to come in some way above the OBR’s full-year forecast of £55.5bn.In reality the situation is probably a little less bleak, as forestalling associated with the pre-announced increase in dividend tax should cause a sharp rise in self-assessment income tax receipts in the first couple of months of 2017. But even allowing for this, Public Sector Net Borrowing (PSNB) looks set to come in some way above the OBR’s full-year forecast of £55.5bn.
10.46am GMT10.46am GMT
10:4610:46
Resolution Group’s Duncan Weldon has crunched the tax receipt data, and found that growth has tailed off a little:Resolution Group’s Duncan Weldon has crunched the tax receipt data, and found that growth has tailed off a little:
UK public finances: tax receipts data suggest a *gradual* slowing of nominal growth over the past 6 months or so. pic.twitter.com/aJKhpBSSFjUK public finances: tax receipts data suggest a *gradual* slowing of nominal growth over the past 6 months or so. pic.twitter.com/aJKhpBSSFj
(Apologies, I initially posted the wrong tax receipt numbers in the 10.04am entry, so you might need to refresh)(Apologies, I initially posted the wrong tax receipt numbers in the 10.04am entry, so you might need to refresh)
10.19am GMT10.19am GMT
10:1910:19
Britain’s total national debt has risen by £50bn over the last 12 months, and now stands at a decidedly lofty £1,641.6 billion pounds.Britain’s total national debt has risen by £50bn over the last 12 months, and now stands at a decidedly lofty £1,641.6 billion pounds.
But..... debt as a percentage of GDP has actually been falling for the last five months, as Britain’s economy has been growing slightly faster than the debt pile.But..... debt as a percentage of GDP has actually been falling for the last five months, as Britain’s economy has been growing slightly faster than the debt pile.
The means the national debt is 83.8% of national output, down from 84.3% in October 2015.The means the national debt is 83.8% of national output, down from 84.3% in October 2015.
10.17am GMT10.17am GMT
10:1710:17
Welcome improvement in public borrowfor Chancellor in Oct but deficit still likely exceed forecast by up to £10bn this yr.Welcome improvement in public borrowfor Chancellor in Oct but deficit still likely exceed forecast by up to £10bn this yr.