The Week Ahead: What will Hammond’s Autumn Statement bring?

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This Wednesday Phillip Hammond will announce his first Autumn Statement which will be the second and more updated response from the Exchequer on finances since the referendum on the UK membership of the European Union.

Monday 21 November

  • CBI Conference

Tuesday 22 November

  • Compass (Q4 results)

Graham Spooner, investment research analyst at The Share Centre says: “There is a strongly defensive nature to the business with good sales growth in some of its biggest markets and a healthy new contract pipeline. With rising profit margins, the share price has performed well year to date, although like a lot of its peers it has fallen back over the last month. Investors will be looking at the effect of currencies, its US operations and for signs of improvement in emerging markets.”

  •  Monthly Industrial Trends Survey – Confederation of British Industry

Wednesday 23 November

  • Autumn Statement announcement

UK Chancellor Philip Hammond will announce his first Autumn Statement to Parliament. The Autumn Statement will include the latest forecasts from the Office for Budget Responsibility for the economy and public finances.

IHS Global Insight chief UK & European economist Howard Archer believes the Chancellor could adopt flexibility within the fiscal framework rather than immovable fiscal targets.

He says: “Indeed, with the major uncertainties surrounding Brexit and the economic outlook, there would seem to be little to be gained and potentially a lot of credibility to be lost from adopting rigid fiscal targets that could quickly look unattainable. On top of this, of course is the fact that the spending cuts already pencilled in looked highly optimistic.

“The Chancellor really needs to have the flexibility in whatever approach he sets out to markedly step up stimulus efforts should the economy suffer a major relapse sometime over the coming months and years from the Brexit process. So he could for example indicate that slippage will be allowed in whatever fiscal targets are announced, should the economy fall into recession, or perhaps even fail to grow by a certain level.”

  • US Federal Open Markets Committee minutes
  • United Utilities (Q2 results)

Spooner says: “The share price has been unusually volatile since Brexit, with a significant fall off since October as a result of a dull trading update, concerns over a hard Brexit, rising bond yields and a move away from defensive shares. Valuations are now looking more attractive and investors will be hoping that these results will help provide a support level.”

Thursday 24 November

  • Marston’s (Q4 results)

Spooner says the last trading update from the brewing group showed that it had “a solid final quarter”.

He says: “The market will be watching carefully for any comments about expectations for the all important festive trading period which is about to begin. Given the healthy dividends, income seekers will be focusing on whether it has risen again as expected. Also of interest to investors will be any update on the group’s plans to expand its pub network. Previously it confirmed that it was hoping to add a further 22 pubs and bars during the year.”

Friday 25 November

  • UK GDP – Q3 2016 (second estimate)

IHS Global Insight expects UK GDP growth to be confirmed at a resilient 0.5 per cent quarter-on-quarter in the third quarter. This will be driven by robust consumer spending as consumers continue to benefit from “healthy fundamentals”.

Archer says: “2017 is likely to be an increasingly difficult year for the UK economy and we expect GDP growth to slow markedly to 1.2 per cent – as consumer fundamentals weaken markedly and uncertainty is heightened by the government triggering Article 50 to formally start the UK’s exit from the European Union.

“The public finances are expected to have improved modestly in October compared to a year earlier – but not by nearly enough to help Chancellor Philip Hammond get nearer to meeting the 2016/17 fiscal targets that were contained in last March’s budget. This will highlight the fact that the Chancellor has limited room for fiscal stimulus in Wednesday’s Autumn Statement if he is to maintain credible adherence to fiscal discipline.”