The week ahead 30 September 2024 - Plot twist for autumn Budget might unlock investment
What to watch out for in the UK economy and property market this week.
After weeks of the UK government preparing the country for an autumn Budget of tax rises and spending cuts, Downing Street last week began hinting that increased investment may be in the pipeline. In her speech to the Labour Party conference, the Chancellor pledged to reverse “low investment that feeds decline”. Then the Prime Minister, speaking in Manhattan, said: “I’ve always thought that we should borrow to invest”. This has prompted speculation that the autumn Budget might see a new set of fiscal rules introduced where debt for capital expenditure is treated differently to borrowing to fund day-to-day government spending. Such a step could unlock money for key areas of policy, such as green infrastructure, housing and transport.
A report in the Financial Times last week suggested the government of Saudi Arabia is considering pushing ahead with plans to increase oil production in December, despite the decline in price for fuel over the summer. In early April of this year, Brent crude oil was trading at just over $90 a barrel, but last Thursday it was below the $73 mark. If Saudi Arabia does increase production, further declines for energy prices might lay ahead, which would place downwards pressure on inflation globally and reduce business costs for industries that are heavy petrol or diesel users, such as logistics, travel and construction. It is interesting to note that last week saw rising geopolitical tensions in the Middle East, but oil still fell in price.
This week sees Nationwide releases its UK house price data for September. The August cut in the Base Rate probably boosted the housing market in September, so we are expecting further growth to be reported. Ongoing speculation of a November rate cut will likely result in lenders offering better mortgage deals this autumn, which bodes well for house prices for the rest of the year. Also, inflation figures will be released for the Euro Area. We are forecasting a marked fall for September, strengthening the case for the next ECB rate cut.
Things to watch for this week
Tuesday, 1st October
Euro Area Inflation, y-on-y, September
Previous: 2.2%
Forecast: 1.7%
With the economy slowing, particularly in Germany, and fuel prices declining, we believe a marked reduction in inflation could be seen in the September figures.
Wednesday, 2nd October
Nationwide House Price Index, y-on-y, September
Previous: 2.4%
Forecast: 2.4%
In the aftermath of the August Base Rate cut, we are forecasting continued house price growth.
Friday, 4th October
Non-Farm Payrolls, September
Previous: 142k
Forecast: 132k
Given the mounting evidence the US labour market is slowing, we are predicting jobs growth to have slowed in September.
