Next week's economics: 28 Jan - 1 Feb

A lack of credit growth is still contributing to economic weakness in the UK and eurozone, next week's figures are likely to show.

On Wednesday, the Bank of England is expected to report that companies are still repaying debt - albeit perhaps at a slower rate than early last year - and that household borrowing, despite a pick-up in mortgage lending, was almost flat in December. This suggests that the Funding for Lending Scheme is so far having little effect, perhaps because economic uncertainty and a desire to repay debt are offsetting the effect of a more plentiful supply of credit.

With falling borrowing contributing to weak demand, purchasing managers are expected to report on Friday that manufacturing output is still falling.

The same story is true for the eurozone. The European Central Bank is likely to say on Monday that bank lending to the private sector is still falling - by around 1 per cent year on year - and purchasing managers will say on Friday that manufacturing is still in decline across the region.

Things are no better in Japan, where figures on Wednesday could show that industrial production fell for the seventh month out of the last eight.

The US is doing better, but only slightly so. Wednesday's official numbers are expected to show that real GDP grew at an annualised rate of 1.5 per cent in the fourth quarter - which is less than 0.4 per cent unannualised. And early signs suggest only weak growth in the first quarter, too. Durable goods orders (Monday) could show a slight rise, consistent with a weak upward trend; the ISM should report a very small rise in manufacturing activity on Friday; and the employment report the same day should show that the economy created a net 160,000 jobs in January, not enough to reduce the unemployment rate from 7.8 per cent.

The housing market could show more strength. The S&P/Case-Shiller index of house prices on Tuesday could show an annual rise of around 4.5 per cent. However, this is doing little to improve consumer confidence. A report the same day from the Conference Board could show that although confidence rose a little this month, it is still very depressed by historical standards.

We will see on Wednesday what the Fed makes of all this. It is expected to repeat last month's policy announcement, promising that, unless the inflation outlook increases, it will keep the fed funds rate low and continue quantitative easing until the unemployment rate approaches 6.5 per cent. This might take some time.

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