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Banking Barclays and HSBC to give results

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Banking giants Barclays and HSBC should confirm a widening gap in performance with their part-nationalised counterparts when they report third quarter figures on Tuesday.

The duo have avoided Government support and the subsequent onerous European Commission penalties that have caused seismic changes at Lloyds Banking Group and Royal Bank of Scotland.

However, recent half year figures from Barclays and HSBC suggested mixed fortunes for the groups as they emerge from the financial crisis.

While Barclays is making hay from its beefed up investment banking operations in the wake of its takeover of parts of bankrupt Lehman Brothers, HSBC is still struggling with mounting bad debts.

At the half-year stage, HSBC reported a 51% drop in pre-tax profits to 5 billion US dollars (£3 billion) after its bad debt charges soared 39% to 13.9 billion US dollars (£8.4 billion).

Meanwhile, the Bank of England could express some optimism on the UK recovery on Wednesday as it releases its latest predictions for inflation and the economy.

In comments accompanying its latest rates decision, the Bank said indications “suggest that a pick-up in economic activity may soon be evident”.

Rate-setters will have had access to the quarterly inflation report before the recent decision to hold interest rates at 0.5% and increase the quantitative easing (QE) scheme by a smaller than expected £25 billion.

This was despite calls for £50 billion to be pumped into the economy after disappointing figures on the money supply and a surprise 0.4% decline in output between July and September, showing the UK had failed to climb out of recession.

The Monetary Policy Committee (MPC) is charged with steering the Consumer Prices Index (CPI) inflation measure to a target of 2%, but the rate slipped to 1.1% in September, having been 5.2% a year earlier.