Wednesday will see the new chancellor of the exchequer, Philip Hammond, present his first Autumn Statement.
He only got the job because the Brexit vote did not go the way former prime minister David Cameron expected, so he cannot carp too much about making his début against a background of economic uncertainty caused by Britain's impending departure from the European Union.
It is early in the electoral cycle – or so we presume – so now is as good a time as any to make the hard (i.e. unpopular but necessary) decisions in the hope that the electorate will have forgotten the tightening of the screws by the time the next election comes around; as such, there may not be many “give-aways” in the budget statement.
With Donald Trump's electoral victory in the USA, infrastructure spending seems to be back in fashion, but do not expect Hammond to announce a "Berlin Wall”-style barrier on the country's southern border, as we already have La Manche – sorry, the English Channel - effectively serving that role.
The focus may therefore be on more sensible infrastructure projects, such as initiatives to alleviate the chronic housing shortage.
Although Hammond, like most politicians working on a five-year electoral cycle, is said to be not overly keen on big infrastructure projects that cost money now (and make him unpopular) and deliver benefits ways down the line (to some other chancellor's benefit), there are rumours that the government is considering innovative ways of backing infrastructure spending.
These may include the creation of a government-backed “infrastructure bank” - if only the government already had an 83% stake in a bank that already exists, eh? - or possibly the concept of “infrastructure bonds” that could appeal to agencies that do take more than a five-year view of things, such as pension funds.
“A programme of infrastructure spending in the 'low billions of pounds a year' is the line the media is now being fed,” according to Grant Lewis, at Japanese finance house, Daiwa.
“Notwithstanding that the chancellor is set to be more cautious than he initially indicated, the position of the UK’s public finances is significantly worse than anticipated at the time of the March Budget. For the first six months of the year public sector net borrowing was £45.5bn, well behind the improvement anticipated by the Office for Budget Responsibility (OBR) in its March forecast, and implying (if the trend of the first half of the year continues into the second) that the deficit will be a full £17bn above that expected,” Lewis stated.
Morgan Stanley is similarly sober in its expectations. “With resilient growth and weak guidance, we expect only modest stimulus. Compared to March, we expect the OBR to forecast a £98 billion increase in borrowing this parliament,” it said.
Prime minister Theresa May has signalled her intention to do something about income equality, so this could be a Budget statement in which a Conservative Party chancellor does a rather improbable impersonation of Gordon Brown.
It is more likely, however, that instead of going for Brown's complex system of grants and income subsidies, Hammond will go for simpler measures such as a freeze on fuel duty and airport tax; the latter will enable Britons to indulge in their favourite pastime of visiting the mainland of that continent it recently voted not to be a part of.
The Conservative party manifesto pledged that the income tax threshold will be raised to £12,500, while for the more well-off the threshold for the higher tax rate should go up to £50,000, as per Tory pledges in the last election.
May has also suggested that her government would put more emphasis on improving UK productivity, so we'll see if the chancellor takes the hint.
“The public finances are problematic and were already set to miss highly ambitious targets even before June’s Brexit vote,” suggested Dr Howard Archer, the chief European & UK economist at forecasting unit IHS Markit, in his preview of the statement.
Archer notes that the previous chancellor's target of achieving a budget surplus by 2019/20 is already out of the window, but that does not mean fiscal discipline is to be abandoned, so expect more spending cuts to be announced.
His predecessor had already signalled Britain's intention to win the race to the bottom by bringing down corporation tax down from 20% to 17% by 2020, though do not expect the tax advisers at Amazon, Google and Starbucks to take any notice.
Hammond is likely to raise a cheer from both sides of the house with a ban on cold calling on pensions, in an attempt to prevent scammers from duping people into investing their nest eggs into inappropriate schemes
MITIE big problems
On the corporate front, although there are some decent-sized companies reporting this week, most of them are of the “big fish in a small pond” variety.
Outsourcing specialist Mitie Group, which releases interims on Monday, is more of a shrinking fish in a small pond.
It issued a profit warning in its September trading update, sending the shares plummeting from 269p to 191.3p in a single day.
Since then the shares have rallied to 211.93p, but challenges remain for new chief executive Phil Bentley when he takes over next year.
The group said in September it was reviewing the options for its Healthcare business in view of “reduced local authority social care budgets and further evidence of unsustainable pricing in some areas”.
The company promised to update the market on this review in Monday's results.
Interim results from Peppa Pig franchise owner Entertainment One are likely to be strong.
“The commentary around Peppa Pig will be bullish. ITV's half-hearted bid approach corrected a valuation gap, but the tired debate over what is and what is not debt drags on. Far Eastern interest in film and TV production assets seems to be accelerating,” noted Peel Hunt, which rates the shares a 'hold'.
Credit Suisse recently raised its target price for Compass from 1,575p to 1,770p ahead of the contract caterer's results on Tuesday.
“Updating again for further sterling weakness drives an underlying 6% EPS [earnings per share] increase on the translation of overseas profits (the UK was only 11% of group revenue in 2015). In addition, this has enhanced the available excess cash flow and hence we have increased the scale of share buy-backs in our model meaning our FY18E EPS increases 8%,” the Swiss bank said.
If dependable income is your thing then interims from water company Severn Trent on Thursday might be of interest.
Deutsche Bank is forecasting a 1% year-on-year decline in profit before interest and tax to £268mln, a 1% rise in profit before tax to £166mln and a 4% fall in earnings per share to 56.2p.
It expects the divi to be upped to 32.6p from 32.3p.
The company is likely to give an update on its incentive programme performance, the German bank believes.
The shares have dropped sharply over the last few months, as the market has bet on bond yields rising, thereby decreasing the appeal of the steady income of utilities. Deutsche rates the shares as a buy, noting they are trading on just 13.5 times projected regulatory earnings.
Significant announcements expected
Monday
Finals: Diploma PLC (LON:DPLM), Future PLC (LON:FUTR)
Interims: Bonmarche Holdings (LON:BON), MITIE Group PLC (LON:MTO)
Tuesday
Finals: Compass Group PLC (LON:CPG), CYBG PLC (LON:CYBG), Renew Holdings PLC (LON:RNWH),
Interims: Assura Group Ltd (LON:AGR), Babcock International Group PLC (LON:BAB), Big Yellow Group PLC (LON:BYG), CML Microsystems PLC (LON:CML), De La Rue PLC (LON:DLAR), Entertainment One Ltd (LON:ETO), Halma PLC (LON:HLMA), Homeserve PLC (LON:HSV), Scapa Group PLC (LON:SCPA), Telecom plus PLC (LON:TEP), Victoria PLC (LON:VCP), Worldwide Healthcare Trust PLC (LON:WWH), Homeserve PLC (LON:HSV)
Trading statements: Intertek Group PLC (LON:ITRK), Kingfisher PLC (LON:KGF), Rotork PLC (LON:ROR), Spectris PLC (LON:SXS), Spirax-Sarco Engineering PLC (LON:SPX), SVG Capital PLC (LON:SVI)
Wednesday
Finals: Future PLC (LON:FUTR), Paragon Group of Companies (The) PLC (LON:PAG), Thomas Cook Group PLC (LON:TCG)
Interims: United Utilities Group PLC (LON:UU.), Vectura Group PLC (LON:VEC)
Thursday
Finals: Euromoney Institutional Investor PLC (LON:ERM), UDG Healthcare PLC (LON:UDG)
Interims: Caledonia Investments PLC (LON:CLDN), Charles Stanley Group PLC (LON:CAY), Helical Bar PLC (LON:HLCL), HSS Hire Group PLC (LON:HSS), Mothercare PLC (LON:MTC), PayPoint PLC (LON:PAY), Pets at Home Group PLC (LON:PETS), Severn Trent PLC (LON:SVT), TR Property Investment Trust PLC (LON:TRY)
Friday
Interims: Pennon Group PLC (LON:PNN)