The budget is just days away. What will the Chancellor have to say? The OBR will present a strong platform for spreadsheet Phil. Growth estimates will be revised up towards the Bank of England norms of around 2% growth this year. Borrowing forecasts will be revised down. The Chancellor may have as much as a £12 billion saving in the current financial year. Extrapolated over the years ahead, the zero borrowing target could be within reach within three to four years.
So will the Chancellor splash the cash? Unlikely! This will be the last Spring Budget before the "New Style" Autumn Budget is introduced. Ahead in the polls, Labour in disarray, mid term in the election cycle, there is no real need to appease the back benches or the electorate for that matter. Some spending on business rate relief, more money for health and welfare, the Chancellor will maintain a steady stance on spending and on taxation. Some tinkering with pension fund provision is expected.
Expect legislation on subscription traps according to the Guardian. The budget will outline plans to better protect consumers who sign up for free trials. Free trials, later converting automatically into paid membership will be outlawed. An attack on small print is expected. Terms and conditions may be shortened and simplified to avoid excess length and jargon. Has the Chancellor had a problem with his Amazon Prime Account? Possibly! Will the Treasury lead the way with simplification of the Red Book Financial Statement? Unlikely. Just days away to find out what's in the red box ...
Economic news this week ... PMI Markit Data ...
This is the week of the PMI Markit survey updates for February. Good news for the manufacturing sector. UK manufacturing recorded further solid growth of output and new orders in the month according to the headline. The index fell to 54.6 from 55.7 in January. Output and new orders increased, albeit at a slower rate. Price pressures remain elevated ... costs pressures were at the highest level in survey history, the feed through to output prices a clear and present danger!
In the construction sector, there was a modest rise in construction output as cost pressures increased at the highest rate for eight years. The index closed at 52.5 up from 52.2 in January. Service sector growth eased to a five month low in February. At 53.3, the index was down from 54.5 prior month but still in growth territory. Overall the data suggests strong growth in the economy continues into the first quarter of the year. Inflation pressures are increasing, job prospects are improving, no fears for Brexit evident ...
In the U.S.A. the Fed has given strong signals interest rates will rise this month based on growth and employment trends particularly. The Bank of England is falling behind the curve. There is no basis to maintain rates at 0.25% ...
West Wing ... Whisky Tango Foxtrot ...
The President gave his address to Congress this week. More Presidential with a softening in tone, did this really mark a sea change in the White House attitude? Hardly. The wonders of auto cue and a strong incentive to stick to the script the more likely interpretation. The President elect had indicated on the campaign trail, he could become more Presidential at the drop of a baseball cap. Nothing changes. No baseball caps in Congress. Trump slipped on the mask of office ...
The President reiterated campaign themes to clamp down on immigration, re work trade deals and increase spending on the military. Health care, infrastructure, lower taxes and lower regulation also featured. Flash rhetoric flowed in a bonfire of the inanities.
"We must rebuild the bridges of trust not drive the wedge of disunity and division. The time for small thinking is over. The time for trivial fights is behind us. We just need the courage to share the dreams that fill our hearts. The bravery to express the hopes that stir our souls and the confidence to the hopes and dreams into action." Touching but it was not to last ...
The President ended the week defending KellyAnne Conway for putting her feet on the couch in the Oval office and defending Jeff Sessions for talking with the Russians during the election campaign. What is it about this administration and the Russians? The time for small thinking may well be over but Trump still found time, to accuse Obama of bugging Trump Towers. "Bad guy". "This is Nixon/ Watergate" tweeted the President this morning! No it isn't.
During the speech, Trump said "Think of the marvels that could be achieved if we simply set free the dreams of the American people" Yep especially the Democrats and the majority who didn't vote for Trump.
The President plans to boost military spending at the expense of the EPA and the State Department. "Each American generation passes the torch of truth, liberty and justice" said Trump "That torch is now in our hands (along with the nuclear codes:Ed) and we will use it to light up the world". Worrying!
That's all for this week from the West Wing Whisky Tango Foxtrot ...
So what happened to Markets?
Markets, were up, the Dow closed at 20,986 from 20,775. The FTSE closed at 7,374 from 7,243.
Sterling was down against the Dollar to $1.225 from $1.249 and was down against the Euro to €1.160 from €1.179. The Euro moved down against the Dollar at 1.055 from 1.059.
Oil Price Brent Crude closed at $55.58 from $56.21 The average price in February last year was $32.18.
UK Gilts - yields moved up. UK Ten year gilt yields closed at 1.19 from 1.09. US Treasury yields rallied to 2.49 from 2.39. Gold closed at $1,222 from $1,256.
That's all for this week. Don't miss the pro-manchester Business Conference in March. We focus on Digital Disruption and the Smart City Challenge. Sponsors Samsung will be demonstrating the latest in virtual rally, plus we have the latest on robotics, AI and autonomous vehicles.
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