This week’s news are likely to be dominated by the Chancellor delivering his Budget on Wednesday, with the release of labour market statistics earlier that day providing some additional flavour. The publication of inflation statistics in the UK’s two largest trading partners, the US and Eurozone, are also likely to attract interest given recent central bank decisions there.
Eurozone and US inflation
With both the ECB and Fed monetary policy decisions under scrutiny, the February inflation numbers could receive more attention than usual. The ECB moved to ease monetary policy further – which while expected, went deeper than markets anticipated – and a weak inflation print could be seen as a vindication of that decision. By contrast, the Fed – which hiked the base rate late last year – will be looking forward to another strong increase in inflation to follow the 1.4% rise in January.
UK labour market statistics
Improvements in the labour market have been a source of triumphalism for the UK Chancellor in recent Budgets, who has been able to boast successive declines in unemployment. With the unemployment rate close to what the Bank of England sees as the equilibrium for the UK economy at 5.1%, further large declines look unlikely. The spotlight is rather likely to be on earnings, where increases have been easing lately from 3% in the three months to September to 1.9% in December 2015.
The Chancellor will be taking centre stage on Wednesday to deliver his Budget for 2016. There has been growing uneasiness among business over news that the Chancellor is likely to announce further spending cuts and tax increases to keep his fiscal consolidation plan on track in response to the tougher economic situation.
Our CEO, Terry Scuoler, has written a comprehensive article on why the Chancellor should not endanger the health of the UK manufacturing sector in that process. We have also set out our key asks for the Budget revolving around the need to keep the UK’s cost base internationally competitive.
Monday: Apprenticeship week by Verity O’Keefe
Tuesday: The outlook for investment before the Budget by Zach Witton
Wednesday: Lee Hopley will round up the Budget
Friday: …and then round it up again once the dust has settled