The key release from the domestic economic calendar will be the UK public finances figures. The release of the April public sector net borrowing (PSNB) figures - the first of the new fiscal year - will be closely watched for signs that the government's finances have started the year on the right foot. In the March Budget, the Treasury forecast net borrowing would be around £122bn during the 2011/12 fiscal year, compared with £141bn in 2010/11. This represents an expected reduction of £19bn over the course of the year and to achieve this net borrowing, on average, would need to be £1.6bn lower in each month, compared with last year. We expect the April figures to show a £4.3bn shortfall, £0.8bn lower than that recorded in April 2010, aided by higher tax receipts as a result of measures announced in the Budget.
Also in the UK, the CBI Distributive Trades survey will also attract interest this morning. Since the turn of the year, the reported sales balance has trended lower, reflecting the current weakness reported in consumer confidence. We expect the release to further highlight the weakness currently facing the household sector.
Elsewhere in Europe, the most significant release is the IFO survey from Germany. We expect the index to show a modest pullback to 113.8 from April's reading of 114.2. However, this would still represent a strong outturn and would still be close to the all-time reached in February.
CHART: Weak consumer sentiment to drag retail sales lower
Disclaimer: Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.
