There was some good news for Chancellor Philip Hammond yesterday, as figures released showed that UK public finances hit a record surplus in January. The latest public sector net borrowing figures showed that the budget surplus widened to £15.76 billion last month from £10.17 billion in the same month the previous year and well above the £11.05 billion the markets had been expecting. It is the largest surplus since records began in 1993 and was largely down to strong income tax receipts.
The chancellor’s spring statement is due on 13 March and provides him with a boost. Let us hope that this manifests in increased public spending, especially given a recent study by the Resolution Foundation said that by 2023-24, the proportion of children in Britain living in poverty is on course to hit 37%. Considering the first ten months of the financial year, the UK’s budget deficit has narrowed by 47% – the smallest gap since the ten months to January 2001.
Purchasing managers’ indices from the eurozone showed that its economy was close to stagnation in February. The euro area’s manufacturing sector unexpectedly contracted this month – the steepest decline since June 2013. New orders decreased to the greatest extent in almost six years. It was arguably worse for Germany, as the eurozone’s largest economy posted a manufacturing PMI reading of just 47.6. Any figure above 50.0 shows growth, so the situation really is rather dire at present.
Onto Brexit (sigh) and there was renewed talk that Theresa May is simply running the clock down so that MPs have a choice between her deal and no deal. Can anyone remember when the Prime Minister repeatedly insisted that no deal was better than a bad deal? Retailers from the UK and Ireland have warned that British consumers will face higher prices and food shortages in the event of a no-deal Brexit, with the potential for tariffs of 40%. May appears to be playing with fire; let us hope she does not get burned, because we will all bear the scars.
The European Commission President, Jean-Claude Juncker, said he was ‘not very optimistic’ that a no-deal Brexit can be avoided. In response, May’s spokesman said “We have been making progress but there is clearly a lot of hard work still to do.” There are 35 days to go until the UK is set to leave the EU. May refuses to extend Article 50, won’t change her proposals, won’t involve MPs from across the Commons in her decisions, won’t offer any real reasons for the EU to renegotiate her plans, cannot command a majority in the House, but insists that she wants to bring back the meaningful vote as soon as possible.
We really cannot emphasise this enough: if the UK exits the EU without a deal, the value of the pound will likely plummet. Nobody can be certain what will happen regarding Brexit, but we can be absolutely certain that sterling will drop against a basket of currencies in the event of a no-deal Brexit. Make sure that your money is protected against this volatility by locking it in with a forward contract – speak to your Personal Trader on 020 7898 0541 to find out more. And don’t hesitate to refer those of your friends and family who would benefit from our award-winning service to protect their money from this very real risk, too. As a thank you, you will earn yourself Smart rewards.