UK borrowing surges to pay for Covid-19 impact
The UK’s debt is now worth more than its economy after the government borrowed a record amount in May 2020. The £55.2 billion was nine times higher than in May 2019 and the highest since records began.
The borrowing sent government debt to £1.95 trillion, exceeding the size of the economy for the first time in more than 50 years.
The borrowing was necessary as the UK government battled against the affects of the pandemic and as an extensive array of spending schemes were introduced. We now have vast debt, the only saving grace is of the low interest rates to service the debt. But for how long will the interest rate stay this low, currently at 0.1%
Breaking out of the lockdown fear
Not going out is the ‘fear trend cycle’ that needs to be broken now. Concerns about the spread of the virus persist, but second wave fears do not appear to be affecting markets as much as expected as investors become used to the idea of rising case numbers.
As far as markets are concerned, it’s not so much about the rising case numbers that is of concern – it’s more about the lockdown ending and of people’s fear of going out that has now become the enemy of economic recovery.
Other market news – quick round-up
Reports suggest, California, Arizona, Florida and Texas all recorded spikes in coronavirus cases Thursday, 18th June amidst re-opening
Trump election rally preparations in Tulsa continue despite virus backlash
Biden yet to choose running mate as VP contender reportedly drops out
UK retail sales rebound in May
China reportedly plans to comply with farm product purchases as part of the U.S. phase one trade deal
1.5 million Americans filed for unemployment last week – higher-than-expected number. Suggests the the economic damage caused by the pandemic is continuing
Scheduled events that may move markets
Friday 19th June
Today, Friday 19th June – one to watch – Fed Chair Jerome Powell’s speech due at: 18:00 BST
Monday June 22nd
China – interest rate announcement due overnight
U.S. – homes sales data due: 15:00 BST
Tuesday June 23rd
Germany – service & manufacturing PMI data due: 08:30 BST
EU – service & manufacturing PMI data due: 09:00 BST
UK – service & manufacturing PMI data due: 09:30 BST
U.S. – service & manufacturing PMI data due: 14:45 BST
Wednesday June 24th
NZ – interest rate announcement
Germany – business sentiment report due: 09:00 BST
Thursday June 25th
Japan – industrial activity report due overnight
Germany – consumer confidence data due: 07:00 BST
EU – ECB monetary policy meeting accounts due: 12:30 BST
U.S. – initial jobless claims data due: 13:30 BST – One to watch!
U.S. – GDP data due: 13:30 BST – One to watch!
Friday June 26th
Japan – consumer price index data due overnight
Key:
Red likely to move markets more, amber less so.