Economics weekly by Lloyds TSB

Recent UK economic data have painted a mixed picture, with the sharp fall in manufacturing production and exports in January contradicted by strong improvements in some of the business surveys – notably, the latest manufacturing and services sector PMIs.

UK budget deficit set to undershoot Chancellor’s forecast

Recent UK economic data have painted a mixed picture, with the sharp fall in manufacturing production and exports in January contradicted by strong improvements in some of the business surveys – notably, the latest manufacturing and services sector PMIs. This week’s reports should hopefully bring a little more clarity, with the latest labour market, money supply and public sector borrowing data all due. The latter will attract particular attention ahead of the 24 March Budget. Public sector net borrowing is forecast to have jumped to £13.5bn in February, taking total net borrowing in the fiscal year to date to £136bn. With only the March figures to come, there is a good chance the FY09-10 budget deficit will undershoot the Chancellor’s Pre-Budget projection of £178bn by around £15bn. While not much in the scheme of things, it should provide the Chancellor with some welcome wiggle room ahead of the General Election.

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