- Howard Archer, an economist at IHS Global Insight
It seems that not everything is perfect in the U.K. While Friday's GDP report is expected to show the economy is now the fastest growing among other G7 countries, the latest budget showed a bigger deficit in June. A report from the ONS showed that public sector finances, stripping out financial sector interventions, registered a gap of 11.368 billion pounds last month, compared with 7.594 billion a month earlier and well above analysts' expectations of a deficit of 10.65 billion. The government aims at a 5.5% deficit of the GDP for the 2014/15 fiscal year, down from 6.5% a year ago. Figures mean that Britain's public finances continue a weak start to the tax year, leaving George Osborne with a lot of catching up to do to meet his fiscal goals.
Another worrying sign for the economy came from the Confederation of British Industries. Recovery in major sectors, including manufacturing, construction and services can cool in the coming months. The balance of total orders in the nation's manufacturing sector advanced only 2% on a monthly basis in July, following a 11% increase a month ago and well below the central market forecast of 8%. Even though the indicator is highly volatile, weak official monthly data came in as a surprise, taking into account other reports. On Tuesday the cable was trading close to a recent low around 1.7058, however, by the end of the week the pair is expected to recover.
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