John Healey yesterday stressed the UK had to ‘be honest’ about its level of public spending as the government prepares for a crucial autumn Budget (28 October).
The chancellor will attempt to strike a balance between facilitating consumer support on cost-of-living issues – the kind backed by Andy Burnham – and stay onside of currency markets. Sterling strengthened slightly against the US dollar and euro on Monday but remains in a perilous position after borrowing costs were strained recently.
Despite all the talk about tricky decisions, private sector hiring picked up in July and headed into expansionary territory in KPMG’s study for the first time in four years.
Jaguar Land Rover’s decision to cut 4,000 jobs rather put a damper on this news. After last year’s disruptive cyber-attacks, the automotive giant confirmed it would be axing over 10% of its global workforce (around three quarters of whom work in the UK) in the next two years, blaming the attacks for the move along with tricky trading conditions.
Britain’s housing market recorded fall its first fall in average sales price in almost three years, according to Lloyd’s. As of August, the average property would have set you back £298,468, almost £700 less than the month prior.
The Japanese yen was the big mover to start the week, strengthening to a six-month high against its rivals as the Bank of Japan indicated it could increase interest rates faster than previously expected.
Tensions in the Middle East increased again over the weekend, with oil facilities in Saudi Arabia reportedly attacked following strikes in the Strait of Hormuz. Brent crude climbed past $97 on Monday, the highest since late July.
GBP: Chancellor promises restraint
John Healey said yesterday that he would continue his predecessor’s attempts to boost the fiscal headroom and get debt as a percentage of GDP falling by the end of this parliament. His remarks seemed to give the pound a moderate boost, although another rise in bond yields served as a reminder that, regrettably, much of this is out of his hands.GBP/USD: the past year
EUR: Political risks rise
The Alternative für Deutschland’s (AfD) win in Saxony-Anhalt may represent a sea change in European politics. With Marine Le Pen the frontrunner in France and other nationalist figures buoyant, euro buyers may soon have to price in the political risk of an inexperienced new group of contenders. German Chancellor Friedrich Merz pledged to stay the course yesterday.GBP/EUR: the past year
USD: Inflation on the mind
American markets return from their Labor Day holiday with inflation front and centre. The US dollar has benefitted from renewed expectations that the Federal Reserve will raise interest rates, making Friday’s inflation release all the more critical for its short-term trajectory.USD/GBP: the past year
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