British budget gap inches down

British budget gap inches down

In September, Britain's authorities faced a smaller budget deficit than anticipated, although the improvement won’t probably help a lot to have minister Philip Hammond financed as he’s working on his annual budget.

As a matter of fact, September’s deficit went down from 4.958 billion pounds to 4.123 billion pounds. That’s what the Office for National Statistics informed. By the way, market experts had generally hoped it would hit 4.5 billion pounds.

Besides this, the figures pointed to a steep downward updated for August's deficit.

For the first six months of this year, Britain’s deficit stuck with 19.9 billion pounds, diving by 35% on the previous year and demonstrating the lowest outcome at this period of the year since 2002.

However, few market experts actually expect Hammond to disclose key moves in spending in his budget on October 29, just five months before the long-awaited Brexit.

Brussels and London have yet to break apart, and the UK’s official budget forecasters have told that Brexit will harm rather than help public funds.

Previously, Prime Minister Theresa May promised to stop the current austerity, although Hammond doesn’t have enough room to maneuver.

Hammond is expected to explain how he’s going to fund May's pledge of higher health spending that by 2023/24 will add up to 20 billion pounds to the National Health Service budget.

Evidently, the ageing of the British population will have public finances pressured in the years ahead before considering Brexit's hit.

Hammond is on the verge of steadily reducing national debt exactly as a share of GDP that he tells is excessively high to back a huge leap in public spending in a future recession.

As a matter of fact, in September, public debt kept to 1.79 trillion pounds, which amounts to up to 84.3% of GDP, down from 86.7% observed in the same month of last year.

 

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Market updates on August 15

The risk sentiment remains under pressure after the comments by China about the countermeasures against the US tariffs. Thus, the AUD/USD and the USD/JPY pairs will be under our attention.

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