Daily Economic Outlook: 19th June, 2015

This morning's release of the May public finance figures will provide the final official assessment of the public accounts ahead of the July 8 Budget. The April figures indicated that borrowing on the PSNB-ex Banks measure fell to £6.8bn from £9.3bn in April 2014. This 27% decline was well ahead of the OBR forecast, made at the time of the March Budget, for the shortfall  for the year to be trimmed by 14% to £75.3bn.  

With the Chancellor already announcing that government departments are expected to find another £3bn in spending cuts, and revenues set to rise on the back of firming pay growth, the new OBR forecasts, which will be published alongside the Budget, could see a downward revision to 2015/16 borrowing. In any case, a £10.9bn print for May which would still leave the cumulative shortfall, at £17.7bn, 18% lower than in May 2014, notes Lloyds Bank.   

Ahead of the start of the ECOFIN meeting in Luxembourg, the German PPI figures for May are expected to show a rise for the fifth consecutive month to -1.1% y/y from -1.5% in April which should further ease euro area deflation fears, says Lloyds Bank. With no significant US data releases today, this afternoon's speech by Cleveland Fed President Mester could give further insights into the policy stance of the FOMC.