PSBR nerves hold back Footsie

An attack of nerves about figures for government borrowing due today and retail sales tomorrow prevented the FT-SE 100 index from passing the symbolic 4,000 level.

Shares in London, however, still managed to set another record, closing up just over 9 points at 3,977.2 in very light trading. But this week's economic statistics are expected to be less encouraging than the recent run of indicators pointing to rapid growth with low inflation.

Analysts expect today's figure for the public sector borrowing requirement in August to amount to more than pounds 4bn following a surprise repayment of pounds 1.7bn in July. And recent surveys suggest that official figures for retail sales last month will rebound.

The gap between government revenues and spending has been scarcely any lower this financial year than last year. The reason for the disappointing performance has been expenditure growth running at more than twice the rate needed to hit this year's target. Many City experts reckon this year's PSBR will exceed the Treasury's pounds 27bn forecast.

Yet the indications are that Kenneth Clarke, Chancellor of the Exchequer, is looking to cut more than pounds 3bn from existing spending plans to announce tax cuts in November's Budget. A freeze on the public sector pay bill for the fourth year running is also likely.

Leo Doyle, an economist at investment bank Kleinwort Benson said: "Existing plans are already really tough. When they take off another few billions in the Budget, it will be very difficult to deliver." He predicted that the PSBR would stick at pounds 29bn this year and next - the same as in 1995- 96.

Other City experts are more optimistic. Ciarn Barr at Deutsche Morgan Grenfell said: "Spending has slipped but I think they will manage to restrain it."

He also predicted that rapid growth in tax revenues, due to consumer spending picking up, would come as a pleasant surprise.

The financial markets are likely to remain on edge until after next Tuesday's meeting of the Federal Open Market Committee.

The risk of an increase in US interest rates can not be completely ruled out despite last week's unexpectedly low inflation figures.

Industrial production and capacity figures due today are known to be closely watched by the Fed. Analysts expect the year-on-year growth in output to fall to just over 3 per cent and would be alarmed by higher growth.

The Dow Jones industrials index was more than 36 points higher at 5,874.77 by late morning.

Suggested Topics
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Sport
David Moyes and Louis van Gaal
football
News
i100
PROMOTED VIDEO
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
News
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
tech
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Life and Style
food + drink
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
News
A cabin crew member photographed the devastation after one flight
news
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits