The quiet festive calendar will continue to throw up little new news for the markets on Tuesday, with macro data scheduled to be the main event.
The final readings of the UK’s and US’s gross domestic product (GDP) growth for the third quarter are expected to confirm readings from the initial readings.
For the UK, this means the bounce back expansion of 15.5% for the three months to September from a 19.8% contraction in the previous quarter is likely to remain the same, while for the US this figure is expected to be confirmed at the record-breaking 33.1% growth figure in the third quarter, rebounding from a record plunge of 31.4% in the second quarter.
UK counts the cost of borrowing
Another area of interest for observers will be the UK government’s public borrowing figures, which in the first seven months of the current fiscal year soared to GBP215bn as the state moved to stave off the worst effects of the worst recession since 1709.
In the November spending review presented by Chancellor of the Exchequer Rishi Sunak, the Office for Budget Responsibility (OBR) suggested that the annual deficit will reach GBP394bn, or nearly one-fifth of GDP, and will still be running around 4% of GDP in three years’ time.
As a result, the new set of borrowing figures are likely to throw up more questions around how the government plans to fund the deficit going forward, whether that be through tax increases, spending cuts or continued borrowing while interest rates remain and ultra-low levels.
Another method is boosting the economy through direct spending, with some analysts having pointed out that the Bank of England could directly fund infrastructure projects to stimulate the economy through a ‘People’s Quantitative Easing’.
Significant announcements for Tuesday December 22:
AGMs: Mosman Oil & Gas Ltd (LON:MSMN)
Economic data: UK GDP, UK public borrowing, US GDP