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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/nov/21/uk-borrowing-deficit-public-finances-hammond-bank-of-england-business-live
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| UK borrowing figures to provide final health check ahead of Hammond's budget - business live | UK borrowing figures to provide final health check ahead of Hammond's budget - business live |
| (35 minutes later) | |
| Global investors seem to have shaken off the German election crisis. | |
| Asian stocks hit a 10-year high overnight, with traders citing optimism over the strength of the global economy. | |
| European markets have opened calmly this morning too, with the UK, French and German indices broadly flat. The word in the City this morning is that Germany’s economy is strong enough to shrug off the uncertainty of a second election (if it comes to that). | |
| But are things too quiet? Nick Leeson, the man who brought Barings Bank down in the 1990s, suspects there may be trouble ahead.... | |
| Where have all the Rogue Traders gone? Markets at highs, lots of self congratulation, complacency rife. More than likely one out there somewhere! | |
| Even if October’s public finances do beat expectations this morning, Britain’s long-term borrowing needs are still worryingly high. | |
| Economists at JP Morgan say Philip Hammond will be batting on a ‘sticky wicket’ tomorrow, as the independent Office for Budget Responsibility (Britain’s fiscal watchdog) may revise down its growth forecasts. That will have a nasty impact on how much tax revenue the government might take in over the coming years. | |
| They write: | |
| Next week’s budget will be significant for both economic and political reasons. The OBR is set to downgrade its view of potential growth significantly, forcing the Chancellor to pencil in either more borrowing or more austerity—a particular challenge given the domestic political backdrop. | |
| The government lacks an overall majority and is under pressure to increase its financial offer ahead of the mid-December EU summit. The Chancellor is also under pressure to use fiscal policy to offer support to key parts of the electorate amid an ongoing real income squeeze, addressing these concerns while ensuring his budget has enough support in Parliament to pass. | |
| JP Morgan thus expect Hammond to absorb any growth downgrades by planning to borrow more over the next few years. | |
| This chart shows how the UK monthly deficit has fluctuated over the last two years: | This chart shows how the UK monthly deficit has fluctuated over the last two years: |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Britain’s public finances will be in the spotlight today as we learn how much the UK borrowed to balance the books last month. | Britain’s public finances will be in the spotlight today as we learn how much the UK borrowed to balance the books last month. |
| Economists predict that the monthly deficit will hit £7bn, down from around £7.6bn in October 2016. | Economists predict that the monthly deficit will hit £7bn, down from around £7.6bn in October 2016. |
| A month ago, September’s deficit came in at just £5.9bn, the lowest in a decade, thanks to a bumper crop of tax takings. | A month ago, September’s deficit came in at just £5.9bn, the lowest in a decade, thanks to a bumper crop of tax takings. |
| Any drop in the October deficit would be welcome news for chancellor Philip Hammond as he puts the finishing touches to tomorrow’s budget. | Any drop in the October deficit would be welcome news for chancellor Philip Hammond as he puts the finishing touches to tomorrow’s budget. |
| Hammond faces a tricky task, given Britain’s productivity problems, and the looming impact of Britain’s exit from the EU. But so far this financial year, the UK has actually borrowed around £6bn less than expected. | Hammond faces a tricky task, given Britain’s productivity problems, and the looming impact of Britain’s exit from the EU. But so far this financial year, the UK has actually borrowed around £6bn less than expected. |
| Finn McLaughlin of Capital Economics expects another decent month’s borrowing figures: | Finn McLaughlin of Capital Economics expects another decent month’s borrowing figures: |
| We expect the public sector net borrowing requirement measure of borrowing to continue to undershoot the OBR’s forecast, providing some good news ahead of the Chancellor’s Autumn Budget on Wednesday. Indeed, we have pencilled in borrowing of £7.0bn in October, just below last year’s outturn of £7.5bn, leaving cumulative borrowing 7% lower than last year. | We expect the public sector net borrowing requirement measure of borrowing to continue to undershoot the OBR’s forecast, providing some good news ahead of the Chancellor’s Autumn Budget on Wednesday. Indeed, we have pencilled in borrowing of £7.0bn in October, just below last year’s outturn of £7.5bn, leaving cumulative borrowing 7% lower than last year. |
| However, this will probably be overshadowed by downward revisions to the OBR’s forecasts for economic growth and therefore the medium-term outlook for the public finances. | However, this will probably be overshadowed by downward revisions to the OBR’s forecasts for economic growth and therefore the medium-term outlook for the public finances. |
| Kallum Pickering of Berenberg bank thinks Hammond should use any windfall this wisely... | Kallum Pickering of Berenberg bank thinks Hammond should use any windfall this wisely... |
| Although Brexit uncertainty hangs over the UK’s long-term outlook, the economy continues to hold up well. Healthy tax receipts so far this year will likely lower projected borrowing modestly in the near term. The Chancellor ought to use this boost to finances to make a stronger commitment to budgetary discipline. | Although Brexit uncertainty hangs over the UK’s long-term outlook, the economy continues to hold up well. Healthy tax receipts so far this year will likely lower projected borrowing modestly in the near term. The Chancellor ought to use this boost to finances to make a stronger commitment to budgetary discipline. |
| Unfortunately, the political barriers between Hammond and this sensible route forward are probably too large. | Unfortunately, the political barriers between Hammond and this sensible route forward are probably too large. |
| Also coming up today.... | Also coming up today.... |
| MPs on the Treasury committee will grill four Bank of England policymakers over the latest inflation report, and their decision to raise interest rates. Deputy governor Sir Jon Cunliffe (who opposed the rate hike) will be accompanied by three external members - Ian McCafferty, Gertjan Vlieghe and Michael Saunders. | MPs on the Treasury committee will grill four Bank of England policymakers over the latest inflation report, and their decision to raise interest rates. Deputy governor Sir Jon Cunliffe (who opposed the rate hike) will be accompanied by three external members - Ian McCafferty, Gertjan Vlieghe and Michael Saunders. |
| European investors will be watching German politics closely, after coalition talks floundered on Sunday night. Angela Merkel has hinted that she’d rather go through another general election than lead a minority government. | European investors will be watching German politics closely, after coalition talks floundered on Sunday night. Angela Merkel has hinted that she’d rather go through another general election than lead a minority government. |
| After yesterday’s wobbles, the markets look calm this morning as traders await developments from Berlin. | After yesterday’s wobbles, the markets look calm this morning as traders await developments from Berlin. |
| European market opening call @LCGTrading $FTSE +5 points at 7394$DAX +8 points at 13066$CAC +5 points at 5345$IBEX -2 points at 10023 | European market opening call @LCGTrading $FTSE +5 points at 7394$DAX +8 points at 13066$CAC +5 points at 5345$IBEX -2 points at 10023 |
| In the City, DIY chain Kingfisher, engineering firm Babcock, food producer Compass and budget airline easyJet are reporting results. | In the City, DIY chain Kingfisher, engineering firm Babcock, food producer Compass and budget airline easyJet are reporting results. |
| The agenda | The agenda |
| 9.30am GMT: UK public finances for October | 9.30am GMT: UK public finances for October |
| 10am GMT: Bank of England policymakers Sir Jon Cunliffe, Ian McCafferty, Gertjan Vlieghe and Michael Saunders appear before the Treasury Committee to discuss the Bank’s inflation report | 10am GMT: Bank of England policymakers Sir Jon Cunliffe, Ian McCafferty, Gertjan Vlieghe and Michael Saunders appear before the Treasury Committee to discuss the Bank’s inflation report |
| 11am GMT: CBI industrial trends report for October. | 11am GMT: CBI industrial trends report for October. |