George Osborne Prepares to Deliver the Worst

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Written By Gholam Rahmani

Financially speaking, the UK this week is set to be full of drama- or as much drama as can be gleaned from the world of finance – but also a whole load of bad news- and there’s always plenty of that to go round.

As last week closed out with Black Friday, and the globally embarrassing images of Jeremy Kyle extras beating each other up in velour tracksuits in the “Whoops!” aisle of Asda to get £20 off a TV made by 80’s car stereo manufacturer, Blaupunkt, the majority of the UK hid behind their sofas – while the world literally rolled on the floor laughing at the neanderthal-like behaviour of the vile masses.

This week however, promises something rather different. Because while the news coming out of Britain is likely to be sobering at best, there’s not going to be much cause for cheer elsewhere either.

Autumn Statement

The Autumn Statement will be delivered on Wednesday, and Chancellor George Osborne must be dreading it. Having last week promised a cash injection to the tune of £2 billion into the NHS next year, he must now deliver the bad news that the UK deficit has barely decreased, wage increases are non-existent, and income tax is not bringing in the forecasted revenue. With a general election now just six months away, he would have hoped to be able to announce a form of tax cut somewhere along the line. Can’t see that happening now. Instead it looks like more borrowing or refinancing of loans may need to be on the agenda. In terms that the Brits will understand – Britain really, really wanted that 50 inch Flat Screen TV, but instead he is going home with a tin of Smart Price Baked Beans and a broken nose.

Elsewhere it doesn’t look much better. Today we see the release of manufacturing purchasing managers’ indices (PMI’s) for the Eurozone, Britain and China, and the prediction is that Britain will see a fall, while the Eurozone and China both linger around the 50 mark. This doesn’t present a decrease, but it doesn’t represent growth either. It is basically a figure locked in limbo. Not exactly great news.

Next up is the service industry and their PMI’s for the Eurozone and UK, much the same as the manufacturers. And the GDP estimate for the third quarter in the Eurozone. This estimate promises to be slightly better in terms of growth than expected, but it is just an estimate.

Rates to Stay the Same?

Then, to follow up the Autumn Statement, Thursday sees the Bank of England and the European Central Bank announce rates and forecasts, and –  in the case of the ECB – massive amendments to previous projections. It is widely expected that the ECB will introduce a US-style quantitative easing model to ease deflation. Indeed, the forecast for 2015 will be negatively revised as will the final forecast for the whole of 2014. The bank of England will undoubtedly leave rates unchanged at 0.5%, which they have been for five years now.

What will 2015 have in store for the global economy? Your guess is as good as anybody’s…..