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Next week's economics: 20-24 February

Chris Dillow

Chris Dillow

The eurozone recession is more or less over, surveys next week could show.

Flash purchasing managers' surveys on Wednesday are expected to say that output in the region was more or less stable in February. And Germany's Ifo survey and the National Bank of Belgium's business climate indicator are likely to show fourth and third successive monthly rises respectively. None of this will point to a vigorous recovery, but it might suggest the worst is over.

Such stabilisation should be good for UK exporters. We'll see whether this is the case in Thursday's monthly survey by the CBI. It should show a small pick up in export orders and output expectations since late autumn.

Any recovery will, however, come off a low base. We will be reminded of this on Friday, with the second official estimate of fourth-quarter GDP. It should confirm that real GDP fell 0.2 per cent. The news will be in the expenditure breakdown, which could show that consumer and investment spending was rather weak.

Despite this, government borrowing seems to be falling, as we'll see on Tuesday. January normally sees a big surplus as self-assessed income tax and quarterly corporate tax revenues come in. Economists expect a surplus on public sector net borrowing of around £9bn, which would take borrowing for the fiscal year so far to around £94bn – putting the government on course to hit or even undershoot the OBR's forecast of £127bn borrowing for 2011-12. Statistical fetishists should note that this would take net debt back below the £1 trillion mark.

There is a political aspect to these numbers. They will give us the first, very tentative, evidence about whether the 50p tax rate really is bringing in revenue. In this sense, a large surplus would not be great news for everyone as it might suggest the higher tax rate is working. (In truth, it's way too soon to say this for sure, but uncertainty has never stopped a political argument before.)

We'll see on Wednesday why the Bank of England decided to undertake more quantitative easing, when it releases minutes of last week's meeting. These could also show that some committee members are disposed to undertake even more of it.

Finally, watch out for US numbers on sales of new and existing homes. Both could show a small pick up, although the data is volatile. Nobody, however, is expecting a significant housing recovery anytime soon.

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