MNI European Morning Briefing

     LONDON (MNI) - There is a full data calendar Tuesday, with the UK public

finances and German ZEW survey set to dominate the morning session.

     The UK public finances will be published at 0830GMT.

     Since early 2015, UK government monthly borrowing has followed a downward

trend, with each month's borrowing figures coming in below its respective

year-ago level. Recent data, however, seems to confirm that this trend appears

to have broken down, owing to the higher inflation, slower growth environment.

     Consistent with this, the OBR forecasts borrowing to come in some stg10.2bn

higher this financial year than in 2016/17.

     In June, borrowing was stg2.0bn higher than in June 2016, the largest

annual increase for over three years, courtesy of higher central government

spending (covering payments made by the UK to the EU) and highest interest debt

payments on indexed-linked bonds.

     July, traditionally a key a month boosted by self-assessment and

corporation tax receipts, will see borrowing recede from the levels seen in the

last few months but remains in line to come in worse than July 2016. Borrowing

last July was stg0.4bn and the median of our analysts' forecasts places this

July's borrowing figure stg0.5bn higher at stg0.9bn.

     Borrowing (excluding banks) is seen coming in as low as -stg2.2bn and as

high as stg1.5bn, with a standard deviation of stg1.0bn from our sample of

eleven forecasts.

     At 0900GMT, the German August ZEW survey will cross the wires.

     The August CBI Industrial Trends numbers will be released at 1000GMT.

     Production and manufacturing data from the Confederation of British

Industry (CBI) has come in a lot stronger than both official data and market

surveys in recent months, leaving analysts trying to decipher the true shape of

industry.

     Though last month's quarterly CBI Industrial Trends Survey reported a

moderation of its headline Order Books Balance by 6.0 points to +10.0 in July,

this was above the series average of -14 from records extending all the way back

to 1995.

     The latest quarterly report, also released last month, highlighted better

this disparity between the different data sources. In the three months to July,

output rose at the fastest pace since Jan 1995 and was expected to expand at a

solid pace over the next three months led by robust domestic and foreign orders.

     Casting thoughts to the data for August, of the four analysts who gave a

prediction, it seems a mixed bag. Two expect headline orders to fall back

(Pantheon, Standard Chartered), another sees it unchanged (Capital Economics)

while the fourth forecasts it picking up (Oxford Economics).

     Again, we attribute this to the contrasting pictures painted by both the

CBI survey and official data. The median outcome is for the orders balance to

have slipped one point to +9.0 in August.

     ECB Vice-President Vitor Constancio participates in a lunch session

"Inequality and the Distributional Impact of Macroeconomic Policies" of 32nd

annual congress of the European Economic Association (EEA) in Lisbon, Portugal,

starting at 1100GMT.

     Across the Atlantic, the US calendar gets underway at 1230GMT, with the

publication of the Philadelphia Fed Nonmanufacturing Index

     At the same time, the Canadian July retail sales data will be released.

     The latest US Redbook Retail Sales Index will be published at 1255GMT,

followed by the FHFA Home Price Index at 1300GMT, when both monthly and

quarterly data will be published.

     The Richmond Fed survey will be released at 1400GMT, followed by the

preliminary Treasury Allotments data at 1800GMT.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com