A weaker-than-expected services sector purchasing managers’ index pushed the pound down across the board on Friday. The headline figure for the UK’s dominant sector posted a reading of 53.3 against the expected 54.1. So the sector is still expanding but at a much slower pace than last month and forecast.
This mirrors the sentiment we’ve started to see in other data readings such as the back-to-back negative retail sales. It’s now being questioned whether the economy actually is as resilient as it appeared to be in the first few months after the Brexit vote in June 2016.
In data terms, this week is going to be fairly quiet, with Friday’s manufacturing data being the highlight.
Much of the markets’ focus will be on the Annual Budget, the first of two this year because the schedule for annual budgets is being changed to autumn. The Chancellor will announce the budget on Wednesday. Early predictions include the personal allowance increasing to £11,500 and the higher tax rate threshold rising to £45,000. It’s also expected that announcements will be made regarding the funding of the NHS and social care.
Changes to business rates came under fire when they were announced as part of the Autumn Statement. It will also be interesting to see if there’s going to be any reference to Brexit and the slowing economy.