Daily Economic Outlook: 21th October, 2015

U.K. public finances data and this evening's speech by Bank of England Governor Carney will be the focus for today. On the latter, press reports suggest that Mr Carney will talk about the impact of the UK's membership of the EU on monetary policy and financial stability. The Governor yesterday, however, dampened speculation that there would be anything too dramatic or political in his speech or in the accompanying report.

U.K. net borrowing on the ex-banks measure is expected to be £9.8bn in September, which would be £1.2bn lower than the same month a year earlier, states Lloyds Bank.  Higher borrowing in August and upward revisions to borrowing over April to July, particularly by local authorities, leave year-to-date borrowing in 2015/16 £4.4bn lower against the equivalent five months last year. Relative to the £20.6bn reduction required to meet the OBR's forecasts for the full financial year, the current run-rate is therefore a little behind schedule. Subdued nominal economic growth could drag on receipts in the coming months. 

Elsewhere, the Bank of Canada is also expected to leave policy rates unchanged at 0.5% on signs that economic prospects are improving, helped by the depreciation of the Canadian dollar. For the rest of the week, markets' sights should be trained on tomorrow's ECB policy meeting and U.K. retail sales and Friday's flash eurozone PMIs, added Lloyds Bank.