Rolling coverage of the latest economic and financial news, as the rising cost of servicing the national debt pushed up borrowing last month
Chief Secretary to the Treasury, Emma Reynolds, says the government is committed to meeting the fiscal rules with “a buffer against uncertainty”.
Responding to this morning’s public finances data, Reynolds says:
“Britain has huge potential to deliver good growth in every postcode, creating jobs, raising living standards and investing in the services people rely on. But we can only deliver that growth with fiscal discipline. “At a time when debt interest costs billions of pounds that could otherwise be spent on improving lives, we must always know where the money is coming from to pay for public services. “That is why we are committed to meeting our fiscal rules with a buffer against uncertainty, taking the tough decisions needed to keep the public finances on a sustainable path.”
This supports our view that a small or medium-sized tax and spending Budget is more likely than a big one and that many of the PM’s policy ambitions will be reined in or delayed to avoid big tax hikes and/or a backlash in the markets.
We think borrowing will be about £125bn (3.9% of GDP) in 2026/27 (OBR forecast £115bn) and that the Chancellor will need to raise between £9-14bn in the Budget to restore his existing fiscal headroom.
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