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.
Economists predict that the monthly deficit will hit £7bn, down from around £7.5bn 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.
Any drop in the October deficit would be welcome news for chancellor Philip Hammond 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.
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.
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…
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.
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.
In the City, DIY chain Kingfisher, engineering firm Babcock, food producer Compass and budget airline easyJet are reporting results.
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
11am GMT: CBI industrial trends report for October.