City eyes final economic data before Christmas shut down

Though investors will be ready to get away for the Christmas break, there are a few sets of economic data that need to be worked through before the city shuts down.

Last week, London’s FTSE 100 index fell nearly 2 percent to close at 7,332.12 points as traders were bombarded by a barrage of global economic news.

The FTSE 100 closed lower last week

On Thursday, the Bank of England raised interest rates for the ninth straight month by 50 basis points to 3.5 percent, the highest since October 2008.

Inflation, GDP and employment figures also poured into investors’ inboxes, prompting a less risky trading week.

This week, the public finance numbers will attract investors’ attention. Government payments to deal with the cost of living crisis and a slowdown in economic activity are likely to have worsened the UK’s fiscal position.

Analysts at Deutsche Bank understand the government borrowed £19bn in November to close the gap between spending and revenue, one of the highest totals for November on record.

Sanjay Raja, a senior economist at the investment bank, said a combination of weaker-than-projected economic growth hitting tax revenues will see government borrowing to beat the Office for Budget Responsibility’s recent projections.

“Markets will be watching closely to see if this trend continues into the winter,” he said.

Raja added that UK mortgage approvals, at around 59,000, are on track to hit their lowest level since the start of the Covid-19 pandemic as potential buyers are pushed out of the market by higher interest rates and pressure on the cost of living.

Raja focused on data as the year turned around, although his predictions are in line with other analysts who have warned that house prices are on course for a sharp correction in 2023.

Lloyds Bank’s Business Barometer survey on Monday is expected to fall from 10 points to 6 points, showing companies are concerned about the impact of the looming recession on their finances.

The Confederation of British Industry retail sales figures and third quarter GDP revisions will be the last major economic data sets in 2022.