This extra degree of transparency will enable the markets to assess whether any rise in the PSBR is really justified in future.Some people have criticised the Fiscal Code on the grounds that it will put budgetary policy in an over-rigid straight jacket, preventing the desirable “automatic” fluctuations in the PSBR which may sometimes be needed to dampen the economic cycle There is no need for this to be the case. The Treasury says that it is deliberately erring on the conservative side in setting fiscal policy over the next five years, so that the terms of the Stability Pact are likely to be met, but there is some ambiguity here.More important is the fact that any significant deviations from fiscal sustainability in future will need to be explained in very clear terms to the public, with the Chancellor being held openly accountable for his decisions. Nick Bubb at Societe Generale Strauss Turnbull is one cautious about retail growth. Although Christmas is late arriving in the shops few doubt that the nation’s retailers are in for another lucrative spell. But next year could be sluggish with few windfalls and higher interest rates taking their toll.Even so, the market bulls are out in force. Mr Semple is on 5,700 points for the end of next year and is prepared to wager that Footsie will greet the millennium at 7,000. Taking a line through the various 1998 forecasts would suggest Footsie will end the year at 5,475.The hazards of predicting anything so wayward as a share market is illustrated by last year’s estimates.

Among strategists Mr Semple was top of the range with what at the time seemed a brave 4,600 prediction. It was later raised to 4,800.International influences, particularly of a Far Eastern origin, will undoubtedly take their toll in the months ahead. And higher US interest rates are likely in the next few months.The British economy, however, seems set fair, although sterling remains a worry.Old-fashioned market fundamentals look good. Share buy-backs, yet more are on the way, are pumping cash into the system and in many takeover bids cash, rather than equity, is king. New issues and rights calls are not particularly prevalent and are not, therefore, draining away much of the market’s surplus cash.Institutional coffers are also overflowing.

So far some, like PDFM and Gartmore, have resisted the call of equities, moving instead into cash. They could eventually see the error of their ways.It is often said that the monthly Merrill Lynch survey of fund managers’ intentions indicates the reverse of what they really think. It could then be significant that the latest poll suggested most managers were not keen to increase their exposure to shares. Another point in the market’s favour is it is still cheap on the international Richter scale and therefore attractive to overseas investors.Of course, the bears still hover. Perennial pessimist David Schwartz is one caught on the hop by the long-running bull market. In his latest newsletter he says: “We believe the 1994-97 bull market is over. It ended on October 3 when Footsie peaked at 5,330.” He points out that shares went on to fall 6.6 per cent in October, the 12th largest decline.