Britain had its smallest fiscal deficit for any May month since 2007 as tax revenue jumped, handing a boost to Chancellor of the Exchequer George Osborne as he prepares to unveil the first Budget of the new Conservative-only government. Net borrowing excluding public-sector banks was 10.1 billion pounds compared with 12.4 billion pounds a year earlier. Government income rose 4.1 percent and spending climbed just 0.6 percent.
Osborne is due to set out his tax and spending projections on July 8 after the Tories won a surprise parliamentary majority in May’s election. He’s warned there will be no let-up in austerity as he seeks to erase a budget deficit of almost 5 percent of gross domestic product by 2018. Some economists have questioned whether he can achieve the 30 billion pounds of spending cuts required.
“There is no shortcut to fixing the public finances,” the Treasury said in a statement. “That is why we will bring forward a strong new fiscal framework at the Budget to entrench a permanent commitment to run a budget surplus in normal times.”
The Bank of England's Ian McCafferty reportedly said interest rates could rise before the end of this year, ahead of the market and economists' expectations, depending on the strength of future economic data.
The Bank of England has held interest rates at a record low of 0.5 per cent for over six years now - but recently officials have warned that a hike is getting closer.
Stocks in Athens were up as much as two per cent Friday afternoon, after the European Central Bank (ECB) offered a lifeline to Greece this afternoon, increasing the amount of emergency liquidity its banks can draw on for the second time this week. It was reported on Friday that the ECB had extended emergency liquidity assistance (ELA) for the country by €3.3bn (£2.4bn). That's on top of a €1.1bn hike earlier this week.
The move came after reports suggested savers in Greece may have withdrawn as much as €3bn from banks in recent days. Greek savers had been slowly transferring their funds out of the country.
Although it had been feared Greece may be forced to introduce capital controls, the ECB's decision suggested this is now unlikely over the next couple of days.
Negotiations broke down on Thursday at a meeting of the Eurogroup of finance ministers, at which there had been slim hopes of an accord. George Osborne said Friday that the UK must "be prepared for the worst" on Greece. In a tweet on Friday, the chancellor said that "while we hope for the best, we now need to be prepared for the worst".
Meanwhile, reports suggested Russia was planning to finance a gas pipeline sending Russian gas to Greece. Alexis Tsipras, Greece's prime minister, has met with Russian President Vladimir Putin in recent days to thrash out a deal. The meetings had been seen as provocative to the European leaders Tsipras is attempting to thrash out a deal with.
After Fridays talks broke down an emergency summit has been agreed between Greek Prime Minister Alexis Tsipras, German Chancellor Angela Merkel, and French President François Hollande in a last-ditch attempt to come to an agreement.
15:00 - USD - Existing Home Sales (May) expected to improve to 5.26M from 5.09M