Britain's government receives another assessment of its spending reduction efforts while Germany prepares for a final vote on a significant borrowing initiative on Friday.
The UK government finances report is expected to reveal the depth of the deficit as the financial year concludes, just days ahead of the finance minister's budget update on March 26. Government departments have been tightening their budgets to help meet the reduction goals set by Chancellor of the Exchequer Rachel Reeves, amid rising gilt yields and a slowing economy.
Last week, British Prime Minister Keir Starmer committed to reducing the bureaucratic complexities hindering economic growth, while the government dissolved NHS England, placing the health service back under direct ministerial oversight.
Reeves aims to balance day-to-day spending with tax revenues by the 2029-30 financial year and is anticipated to announce the establishment of a fiscal buffer of £9.9 billion ($12.83 billion), according to a report from Bloomberg.
In Germany, investors are celebrating the expected approval of legislation for a €500 billion ($542 billion) fund focused on infrastructure and increased defense spending. This plan received approval in the lower house Bundestag earlier this week, providing a significant boost to conservative leader and chancellor-in-waiting Friedrich Merz, and raising hopes for growth in Europe’s largest economy. The legislation is set to pass through the Bundesrat upper house today.
In broader markets, Wall Street's earlier bullish momentum, triggered by Federal Reserve Chair Jerome Powell's assurances of a robust economy and transitory price increases from tariffs, appears to have dissipated. Both Treasuries and the dollar are gaining, reflecting a general "risk-off" sentiment, while gold continues to soar, having risen 16% this year to reach record highs.
As global uncertainty in economics and politics increases, policymakers worldwide have held steady on interest rates during a week filled with central bank meetings in the U.S., UK, and Euro zone.
Key developments that could influence markets on Friday include:
DATA: UK public finances (February), Euro zone current account (January), Euro zone consumer confidence (March flash estimate), Canada retail sales (February)
SPEAKERS: Chicago Fed President Austan Goolsbee, New York Fed President John Williams, and European Central Bank member Jose Luis Escriva at an event in Barcelona.