United Kingdom 2020 Spending Review

Info

History

Chart

Impact:

Medium

Next Release:

Date:

Period:

What Does It Measure?

The United Kingdom 2020 Spending Review measures the government’s planned allocation of resources across various public services, assessing fiscal priorities and overall budgetary strategy. It primarily focuses on expenditures related to health, education, security, infrastructure, and welfare, which are critical components of economic stability and growth.

Frequency

The Spending Review is conducted annually, providing a comprehensive overview of governmental fiscal policy for the coming years; it is typically released in late November. It represents a final figure rather than a preliminary estimate, thus offering an accurate reflection of the government’s financial planning.

Why Do Traders Care?

Traders pay close attention to the Spending Review as it outlines government spending priorities that can significantly impact financial markets, influencing the valuation of the British Pound (GBP) and market sentiment related to stocks and bonds. Stronger than anticipated spending in areas such as healthcare or infrastructure can boost economic growth expectations, making it a bullish signal for both the GBP and the equity markets.

What Is It Derived From?

The Spending Review is derived from comprehensive budget assessments undertaken by HM Treasury, which includes input from various government departments and consultations with economic experts. The data reflects projected economic conditions, revenue forecasts, and strategic policy objectives, ensuring an informed allocation of government resources.

Description

The 2020 Spending Review not only addresses the immediate financial needs arising from the COVID-19 pandemic but also sets a framework for economic recovery and long-term growth. The review emphasizes strategic investments, such as in health and technology, to bolster resilience and drive economic engagement while aligning with the government’s broader goals for public service funding and infrastructure reform.

Additional Notes

As a coincident economic measure, the Spending Review serves as a direct indicator of the government's fiscal stance and its response to economic challenges. This review is particularly critical in times of crisis, like the pandemic, as it allows for comparisons with previous budgetary frameworks and provides insights into the economic recovery trajectory of the UK compared to global trends.

Bullish or Bearish for Currency and Stocks

Higher than expected: Bullish for GBP, Bullish for Stocks. The Spending Review signals increased government investment to support economic recovery, which is usually beneficial for the currency due to improved growth prospects and positive sentiment in the stock market as sectors such as healthcare and infrastructure see enhanced funding.

Legend

High Potential Impact
This event has a strong potential to move markets significantly. If the 'Actual' value differs enough from the forecast or if the 'Previous' value is significantly revised, it signals new information that markets may rapidly adjust to.

Medium Potential Impact
This event may cause moderate market movement, especially if the 'Actual' deviates from the forecast or there's a notable revision to the 'Previous' value.

Low Potential Impact
This event is unlikely to affect market pricing unless there's an unexpected surprise or a major revision to prior data.

Surprise - Currency May Strengthen
Actual deviated from Forecast on a medium or high impact event and historically could strengthen the currency.

Surprise - Currency May Weaken
Actual deviated from Forcast on a medium or high impact event and historically could weaken the currency.

Big Surprise - Currency More Likely To Strengthen
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely strengthen the currency.

Big Surprise - Currency More Likely To Weaken
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely weaken the currency

Green Number	Better than forecast for the currency (or previous revise better)
Red Number	Worse than forecast for the currency (or previous revise better)
Hawkish	Supports higher interest rates to fight inflation, strengthening the currency but weighing on stocks.
Dovish	Favors lower rates to boost growth, weakening the currency but lifting stocks.

Date	Time	Actual	Forecast	Previous	Surprise