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Philip Hammond's first-ever UK Spring Statement to show austerity still very much alive

The day ahead includes the first-ever UK Spring Statement from Chancellor Philip Hammond, plus full-year results from Antogasta, Cairn Energy, and Fevertree Drinks
Chancellor of the Exchequer, Philip Hammond
The Budget is now pushed back to the autumn, after the Chancellor of the Exchequer announced changes to the age-old economic tradition last November

No real surprises are expected from the UK’s first-ever Spring Statement, with the Budget now pushed back to the autumn, after the Chancellor of the Exchequer, Philip Hammond announced changes to the age-old economic tradition last November.

As he trailed in interviews last weekend, Hammond is expected to keep austerity alive in the statement amid an uncertain UK economic outlook.

The statement is, however, expected to reveal a brighter short-term outlook from the Office for Budget Responsibility (OBR) and an improvement in the public finances, with the Chancellor aiming to eliminate the budget deficit by the mid-2020s.

In November, the OBR estimated that public sector net borrowing would rise by £4.2bn year-on-year to £49.9bn in the 2017/18 financial year. But the Resolution Foundation has said the deficit for 2017/18 is expected to be £7bn to £11bn lower than the OBR’s estimate.

On the corporate front, fourth-quarter numbers from blue-chip miner Antofagasta PLC (LON:ANTO) are expected to illustrate the exceptional 2017 seen so far from commodity firms as they clean up their balance sheets and reduce costs.

In a preview, Graham Spooner, investment research analyst at The Share Centre said: “With overall production improvements and higher average commodity prices, investors should expect strong sales growth compared to the previous year and a significant improvement in overall profitability.”

He added: “Key to the future will be whether the new mines and assets offset the declining grades of ore at some older mines.”

Focus on news fields for Cairn Energy

Staying with commodity stocks, like Premier Oil PLC (LON:PMO) last week, attention in Cairn Energy PLC’s (LON:CNE) full-year numbers will be on new field start-up and cash flow growth when.

Premier reassured on the jointly-owned North Sea Catcher field – in which Cairn has a 20% stake – so the focus on Tuesday will be on the Kraken field.

In terms of the financial results, UBS analysts expect underlying earnings (EBITDAX) of US$10mln, an operating loss of US$127mln and a net loss of US$90mln.

Meanwhile, Fevertree Drinks PLC (LON:FEVR) said in a trading update in January that a strong festive period meant its full-year results – also due on Tuesday - will be "comfortably above" expectations.

The AIM-listed firm added that it had enjoyed another year of strong revenue growth, with sales for the 12 months to December 31 expected to be around £169mln – 66% higher than the £102.2mln it generated in 2016.

The mixer drinks firm noted that the UK was once again the star performer, with sales in the company’s home market doubling over the year, while European sales were not quite as strong but still rose 42% year-on-year, and US sales were projected to be up 39%.

Significant events expected on Tuesday March 13:

UK Spring Statement (12.30pm)

Finals: Antofagasta PLC (LON:ANTO), Applegreen PLC (LON:APGM), Bango plc (LON:BGO), Brady Plc (LON:BRY), Cairn Energy PLC (LON:CNE), Computacenter PLC (LON:CCC), Crossrider Plc (LON:CROS), French Connection Group PLC (LON:FCCN), Fevertree Drinks PLC (LON:FEVR), Gresham Technologies PLC (LON:GHT), Glenveagh Properties PLC (LON:GLV), Goals Soccer Centres PLC (LON:GOAL), H&T GROUP PLC (LON:HAT), LMS Capital PLC (LON:LMS), Midwich Group Plc (LON:MIDW), John Menzies PLC (LON:MNZS), Restore Plc (LON:RST), Stadium Group plc (LON:SDM), Smart Metering Services PLC (LON:SMS), Surgical Innovations PLC (SUN), TP ICAP PLC (LON:TCAP), XLMedia PLC (LON:XLM), Zotefoams Plc (LON:ZTF)

Interims: Close Brothers Group PLC (LON:CBG), Eagle Eye Solutions Group PLC

Economic data: US consumer price index


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