There are two major data events of note this week, the latest assessment of the UK economy from the Office for Budget Responsibility (OBR) and the second estimate of GDP, covering 2015q3.
Economic and Fiscal Outlook
While most of Wednesday’s focus will be on the policy detail of the Chancellor’s fiscal extravaganza (you can read our wishlist here), we will also hear about the OBRs latest forecast updates as context for the announcement specifics. This usually involves a long list of the UK’s economic highlights at the start of the speech.
For reference, we’ve put together a short cut-out and keep table of the OBRs forecasts for the economy and the public finances from its July report.
This time, it’s looking less likely that the Chancellor will be able to trumpet the fact that the UK is the fastest G7 economy this year or next. If as expected, the OBR leave their growth forecasts largely unchanged the UK should be a close second to the US.
He should still be able to claim that the public finances are improving, with public sector net borrowing down in 2015/6, compared with 2014/5. However, the worse than expected numbers for October mean that HMT may end up slightly off target for this year.
Hitting the borrowing forecasts for future years will depend on non-protected departments (all of which have now settled) identifying cuts of nearly a fifth over the rest of this parliament.
Source: Office for Budget Responsibility (OBR).
^ Percentage points contribution to GDP growth
* Public finance figures are for 2014/15, 2015/16 and 2016/17 financial years and exclude temporary effects of Royal Mail pension transfer and Asset Purchase Facility (APF) transfer.
We’ll have a full round up of forecasts and policy announcements on Wednesday.
2015 q3 GDP
We’re still pencilling an increase of 0.5% growth for the three months to September. More interesting will be the detailed picture on the contributors to growth. Consumer spending should account for the lion’s share of the increase in q3, with investment also pitching in. Net trade, however, is expected to be a drag on growth, following a positive contribution in the second quarter.