httpvh://www.youtube.com/watch?v=StQOd2Sjlps

Yesterday’s Interest rate decision was, as usual, nothing new. The Bank of England decided to keep interest rates at current rates and not change the level of quantative easing, a decision that was expected due to the recent slightly positive signs from the recovery. However, there are still fears that the performance in the second quarter will not last and that the factors which boosted it were temporary. More data published yesterday showed that Trade deficit has apparently widened to a post war record after imports exceeded exports by 13.2bn in the three months to July. The general view on this is that it is reassuring about the strength of the domestic economy but which is discouraging for growth prospects in the longer term.

Nick Clegg has tried to ease fears over the government spending cuts looming next month by urging people ‘not to panic’ and that the coalition did not want to see a culling of jobs. With Osborne promising a clampdown on benefits, Clegg’s words present a rapid change of attitude. This is probably down to the concerns that the future cuts could undermine economic confidence – that and the fact that the Lib Dem’s are being punished in the polls.

Goldman Sachs has been fined £17.5m by the FSA in the wake of the US fraud case. Apparently they had to chose between a fine or their compliance practices being condemned internationally, they chose the fine. 

Germany’s Consumer Price Index came out better than expected yesterday at 1% but this was still worse than the previous rate of 1.2% but at least was on forecast for August. In an interview at the FT Trichet has said that ‘eurozone members that break the region’s rules on public finances should be excluded temporarily from Europe’s political decision making’.

There was not much to report from the US yesterday apart from the Florida Pastor luckily calling off his plans to burn copies of the Koran, when the Islamic centre plans near ground zero were called off. Also that the narrowing of the US trade gap in July suggests that net external demand will have a broadly neutral impact on GDP growth in the third quarter.

The data to watch out for today is the UK’s Producer Input Prices at 9:30 this morning, which will show the monthly inflation measurement. Italy and France are attempting to boost the euro with Italy’s GDP and Industrial Production, followed by France’s Manufacturing Production later in the day. Canada also has their unemployment rate out at midday.