UK Net Borrowing likely to miss forecasts

United Kingdom’s Public Sector Net Borrowing (PSNB) figure showed that the public sector borrowed £7.47 billion in excess of what it raised as income during October. According to the data released by the Office of National Statistics (ONS) on Friday, the deficit was higher than what analysts were expecting (£5.30 billion) and compared to last year’s October data, there was an increase by more than £1 billion.

The UK government’s borrowing from April 2015 to October 2015 is at £54.3 billion and there is evidence for those concerned that it could not meet the Office for Budget Responsibility’s (OBR) forecast for £69.5 billion for the financial year April 2015 to March 2016. Even though there is a surplus during January of each year due to a stream of self-assessment income tax receipts, it looks like that Chancellor George Osborne will find difficulties in restricting government borrowing to only £15 billion between now and the end of March 2016 and therefore achieve the target set.

The UK Treasury said that the economy’s rebalancing has not been achieved yet and that the level of government borrowing is too high. While austerity measures were taken, during the current financial year, the UK government spending increased by more that 1% to £403 billion. This is mainly due to the exemption of the health budget from the austerity measures, and also the increase of the basic pension benefit by at least 2.5%. It is now possible that George Osborne might amend the PSNB forecast for the financial year during the upcoming HM Treasury’s Autumn Forecast Statement, due on Wednesday 25 November at 12:30 GMT.

The GBP/USD on Friday decreased by 0.6% at 1.519. It erased any gains previously achieved during last week, and so on a weekly basis it incurred losses by 0.2%. The pound even decreased marginally against the struggling euro by 0.1% to 0.70067.

On the other side of the Atlantic, a possible U.S. interest rate increase continues to be priced in as the release of the latest Federal Open Market Committee (FOMC) meeting minutes revealed the policymakers’ growing confidence on improving economic conditions. According to the October meeting’s minutes, FOMC members see an improvement of the labour market conditions, as well as the U.S. inflation moving towards the 2% annual target. The report also stated that the U.S. economy has weathered instability in global markets without signs of stress.

Despite the encouraging FOMC data on Wednesday, the EUR/USD had marginal gains by 0.3%, and it is probably an indication that the markets are slowly digesting the possibility of an interest rate increase by the Federal Reserve (Fed) during its December meeting.

But although some traders across the globe are already placing their investment positions in order to benefit from the possible interest rate increase by the Fed, there could be still room for markets to be upset by upcoming economic data. The U.S. Durable Goods Orders report for October 2015 is expected for release on Wednesday 25 November 2015 at 13:30 GMT, and despite not being one of the major parameters monitored by the Fed in deciding whether to proceed with a rate hike, it could maybe stir the markets in case it doesn’t meet the analysts’ expectations for an increase compared to the previous month.

The post UK Net Borrowing likely to miss forecasts appeared first on Forex.Info.

Source:: UK Net Borrowing likely to miss forecasts

About the Author
With over a decade of trading expertise and 100,000 fulfilled clients in 160 countries worldwide, easyMarkets will tick all your boxes whether you are a new or experienced trader, affiliate or introducing broker. [space height="20"] Trade 300+ markets including currencies, commodities, metals, vanilla options and indices from one place without the jargon, complicated offers and confusing terms! [space height="20"] Welcome to the exciting world of trading. Welcome to easyMarkets.

Related Posts

Leave a Reply