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Week Ahead (21 September)

W/C Monday, 21 September - UK economic data to be released

The UK will release a new set of economic data this week, including data on house prices (21 September), public sector finances (25 September), consumer confidence (25 September), the Bank of England’s quarterly bulletin (25 September), and flash composite PMI figures (23 September).

The expansion recorded in August was the fastest since October 2013. The flash composite PMI figure for the UK in August was 60.3, representing an 82-month high. The UK manufacturing PMI in August 2020 was 55.3, up 1.9% compared with July level of 53.3. The UK flash services PMI from August was 60.1, a 72-month high. GDP grew by 6.6% in July and by 8.7% in June.

While the easing of lockdown measures caused output to increase over the summer months, the possibility of renewed restrictions and a second surge of coronavirus infections is reducing confidence. So far, the UK economy has contracted by 10.3% this year.

A report by KPMG predicts that the UK economy could grow by as much as 8.4% in 2021 if infections do not spiral out of control and a deal on Brexit can be reached. According to the report, however, a second wave of the pandemic, an inability to produce and distribute a safe and effective vaccine, and/or a no-deal Brexit could limit growth in 2021 to as little as 4%.

Monday, 21 September - Italian regional elections to conclude

Elections in seven of Italy’s regions will conclude today. In Veneto, the incumbent, Luca Zaia (Lega), already popular, has seen his support levels increase in response to his handling of Covid-19. Similarly, in Campania, the pandemic appears to have benefitted incumbent Vincenzo de Luca (PD). De Luca led in polls in Campania taken earlier this summer, with 65.4% of voters planning to re-elect him.

In Tuscany, a traditional leftist stronghold, the outcome is less clear. A win for the Democratic Party candidate Eugenio Giani and the left is still the most likely outcome, however. M5S candidate Irene Galletti and Susanna Ceccardi (Lega) are also in the running for President in Tuscany.

In Marche, which the PD-led centre-left alliance won comfortably in 2015, polls suggest momentum is with Fratelli d’Italia candidate Francesco Acquaroli. The centre-left may also lose control of Puglia, where Fratelli d’Italia candidate Raffaele Fito may well dislodge the incumbent PD President Michele Emiliano. The loss of these regions would represent a significant setback for the PD.

In Liguria, where President Giovanni Toti of the centre-right is likely to win re-election, the Five Star Movement (M5S) and the Democratic Party (PD) have formed an alliance to nominate Ferruccio Sansa as their candidate. Liguria is the only region in which the PD-M5S government coalition managed to put forward a joint candidate.

Valle D’Aosta, a small French-speaking region, is also holding regional elections; however, the region operates under its own party system and electoral rules. The outcome in Valle D’Aosta is far from certain, although Lega has been gaining support.

Wednesday, 23 September - Composite PMI data to be released

The latest flash eurozone composite PMI data will be released on Wednesday, 23 September. Last month’s figures, released on 20 August 2020, showed a composite PMI of 51.6, which represented a two-month low and a drop from the July figure of 54.9. The PMI figure for August was still above the 50.0 mark, which separates activity expansion from contraction; however, the virus containment measures that may constrain economic activity are being reinstated across much of Europe to help curb a rise in coronavirus infections and may hamper further expansion.

The manufacturing PMI in August was 51.7, roughly the same as the figure for July, 51.8. The services PMI fell to 50.1 in August (also a two-month low), from 54 in July. Both measures still remained above the 50.0 threshold that denotes expansion during July and August.

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