Financial Statement Analysis: Tuesday preview: Autumn statement, ITE, Topps Tiles

Tuesday preview: Autumn statement, ITE, Topps Tiles

Tuesday preview: Autumn statement, ITE, Topps Tiles

LONDON (SHARECAST) - The Chancellor of the Exchequer, George Osborne, makes his Autumn statement on Tuesday and, as usual, he will have had no shortage of lobbyists offering him advice on how to kick-start the UK economy and, while he is at it, get the Tories re-elected.

The Chancellor is expected to begin his speech at around 12:30pm and one of the key elements will be the gross domestic product (GDP) projections from the Office for Budget Responsibility (OBR).

Altium Securities describes the statement as "the big set piece event in the UK" and notes that "the weekend press made it clear just how much the Chancellor needs to sweeten an inevitably bitter pill: the apparent official launch of credit easing is doubtless designed to divert the attention from what will be some swingeing cuts to the OBR’s GDP projections."

Barclays Capital (BarCap) expects the OBR's updated analysis to show the government meeting its fiscal targets, "but by a wafer-thin margin, with the key cyclically adjusted current balance target met only in 2016-17, two years later than the OBR had projected in March."

"We expect the Chancellor to announce a number of policy measures aimed at boosting growth, although we expect these to be mainly structural in nature and to be broadly fiscally neutral.

We expect no fundamental deviation from the government's fiscal austerity plans," BarCap added.

Dr. Ros Altmann, the Director-General of the Saga Group, the company focused on the over-fifties, described the fiscal situation as "dire" and is one of those pundits with some advice for the Chancellor.

The pensions and economics policy expert and former investment banker said that the Chancellor is desperately looking for new sources of funding, and has picked up on week-end press reports that he will "harness the power of pension fund investment to help stimulate the economy and create jobs."

In Dr. Altmann's view, that will be "far better than those funds buying gilts which have been artificially distorted by QE [quantitative easing]."

"There are hundreds of billions of pounds in pension funds which are needed to pay out pensions for the coming decades - most of the money is not required straight away - and if that money were invested in British infrastructure, it could generate growth as well as good returns," Dr. Altmann said.

Press reports also indicate that Osborne will either cancel or postpone, in full or in part, the fuel duty increase planned for January, with money saved from cuts in some welfare payments.

That will keep the car drivers happy, whole the hard-pressed rail commuters could be thrown a bone in the form of smaller than anticipated rail fare increases scheduled for January; currently, fares are slated to go up by an average of 8.2%, but this figure could be shaved by a couple of percentage points.

The political drama is likely to overshadow what is, in any event, a fairly light schedule of company results.

Exhibitions and conferences firm ITE Group is set to announce full-year figures just a day after unveiling a bolt-on acquisition in the Ukraine.

The market is expecting a sharp rebound in pre-tax profits to £50m on turnover of £153.5m.

Shares in Topps Tiles soared in late September after the tile and flooring retailer said it expects to report revenues of £175.7m for the year to 1 October, down from £182.4m the previous year.

It also said like-for-like revenues will decrease by 1.9%.

Pre-tax profit is expected to be in line with analysts’ estimates, which at the time of the late-September update was around £14m, but which has subsequently slipped to £13.2m.

With the cat let most of the way out of the bag, focus will be on current trading.

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