UK Budget, US jobs data to watch
The FT's Vanessa Kortekaas provides a briefing of the key stories to watch in the week ahead, including the UK Budget, employment data from the US and annual results from insurers including Aviva and Legal & General.
Filmed by Rod Fitzgerland. Produced by Vanessa Kortekaas. Additional footage and images by Getty and Reuters.
Well, welcome to The Week Ahead from the Financial Times in London. Here's some of the big stories we'll be watching in the coming days. We'll have economic forecasts updates from the UK and inflation data from the European Central Bank. In the US, all eyes will be on new employment data. And we'll have a health check on some of Europe's biggest insurance companies.
We'll start in the UK, where Chancellor Philip Hammond will present his first and last spring budget. After this, the government is moving the budget date to the autumn, while the chancellor is known to want to modernise the tax system to reflect the digital nature of society. He's likely to wait to the autumn to announce any large tax reforms. This is, however, a politically significant budget, because it's the last one before the UK formally begins the process to leave the EU. Here's our economics editor Chris Giles on what to expect.
The budget on Wednesday is likely to have a wider international significance, because it comes just before Britain is going to trigger the Article 50 to leave the European Union. Now the domestic numbers aren't going to be that huge. There's going to be an improvement in growth, because the economy's done better and the public finances in the short-term. But we're not going to see large tax changes, tax increases, or tax cuts. Instead, the chancellor's likely to bank any improvement in the public finances so that if the negotiations for Brexit go quite badly and the economy has a downturn in the next two years, he's got money saved, which he can spend to smooth the path of the British economy Over the next two years.
Now the European Central bank's governing council is set to meet in Frankfurt on Thursday to discuss the recent rise in inflation across the single currency area. After years of undershooting the central bank's target inflation is around the 2% mark once more. Few expect this to lead to any immediate changes in the central bank's policy. But on Thursday, we'll find out more when ECB president Mario Draghi outlines his latest inflation forecast.
Now to the US, where on Friday traders will be analysing US jobs data for further evidence of a strengthening economy. Economists are estimating that the US economy added 180,000 jobs in February, compared with the 227,000 jobs added in January. They also expect the unemployment rate to slip to 4.7% from 4.8%. Now employment is a topic that has been a key theme in the new US administration. This is what President Donald Trump had to say about job creation in his first address to Congress last week.
I will not allow the mistakes of recent decades past to define the course of our future. For too long, we've watched our middle class shrink, as we've exploited our jobs and wealth to foreign countries. Since my election, Ford, Fiat-Chrysler, General Motors, Sprint, SoftBank, Lockheed, Intel, Walmart, and many others have announced that they will invest billions and billions of dollars in the United States and will create tens of thousands of new American jobs.
If the figures indicate a more robust economy, then that could cement the Federal Reserve's case for raising interest rates. An uptick in wage inflation would make a March move more likely, as the Fed's preferred inflation measure is approaching its 2% target. Now finally two of Europe's biggest insurance companies are reporting their full year results next week.
And analysts have warned that they could be met with some unhappy noises. Aviva's results are out on Wednesday. And Legal and General announces its results on Thursday. The insurance sector has had to juggle several challenges lately, as our correspondent Oliver Ralph explains.
The insurance industry has had his hands full recently, dealing with a combination of low interest rates, the European Union's new Solvency II capital rules, and also the impact of Brexit. They've now got something else to think about, because the UK government has just announced a big change to the way their personal injury compensation payments are calculated. That's going to mean a big increase in claims payments from the insurance industry.
We'll hear from Admiral and Direct Line next week, both of which are very heavily affected by this. And they're likely to have some comments on what they think of the change. We'll also be hearing from the life insurance industry from Aviva and Legal and General.
Now the life insurers have been campaigning against the European Union solvency tools. And they won't see changes to the policy they think are effecting their businesses most. So we're likely to have some comments on that as well.
Analysts are hoping Aviva will provide some concrete signs that its digital strategy is bearing fruit. Aviva said that his results would include a 385 million pound hit, because of changes to the way that large personal injury claims in the UK are calculated. But Panmure Gordon is still estimating Aviva full year operating profits will rise 8% to $2.9 billion pounds. Legal and General's operating profits are forecast to be 1.6 billion pounds, which would be 13% higher than last year. And that's with the week ahead looks like from the Financial Times in London. See you again next time.