Bad news for Gordon Brown ahead of the Budget Report

UK public finances deteriorated in February following January’s record surplus it was announced this week. Chancellor of the Exchequer Gordon Brown received unwelcome news ahead of tomorrow’s budget report as worse-than-expected public finances figures for February look set to dampen hopes that he may be able to achieve his forecasts for the current fiscal year, figures showed.

The figure comes well below expectations of around GBP0.7bln at GBP2.3bln – the highest borrowing for February since 1997.

US Federal Reserve Chairman Ben Bernanke, in his first public foray on Wall Street, offered conflicting signals on interest rates but said the economy should keep growing at a brisk pace. Bernanke’s speech was his last scheduled appearance before the Fed meets on March 27-28 to decide whether to increase interest rates for a 15th straight time by a quarter-percentage point, to 4.75 percent.

The Fed chairman’s optimistic outlook for the economy, and his view that homeowners can absorb a slowdown in the housing market without too much strain, suggesting rates will move higher.

In the US on Monday it was announced that leading indicators fell 0.2% in February, which ended a string of increases that ran on for four months in a row, possibly signalling that the economy may continue to expand this spring before slowing later in the year.

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