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Chancellor Rachel Reeves faces the prospect of reducing or raising public expenses after the British fiscal watchdog was privately warned of a weaker economic outlook.
Preliminary forecasts from the office for budget responsibility show that the tax headroom that Reeves had against its important budgetary in October was wiped out by factors, including poor economic data, according to people who are familiar with the matter.
The forecasts that were sent to the Ministry of Finance last week could force the Chancellor in stricter issues by government departments to the pencil or find additional tax revenue in their spring declaration on March 26.
After a time of flatlining growth in Great Britain and an increase in the government’s credit costs, which the margin against Reeves’ rule seeps away, it comes, which provides that the current expenses without investments are financed through tax revenue.
The first draft of the ABR forecasts published together with the spring declaration reflects the developments in the economy since Reeves’ budget in October, but not the effects of potential political changes.
In October, OBR’s forecasts showed that Reeves had an equilibrium against their rule for the current budget by 2029-30 and, according to the Institute for Financial Studies. Tank.
The new preliminary forecasts of the OBR suggest that the headroom was deleted, said the people familiar with the matter. The downgrading was first reported by Bloomberg.
The forecasts of the fiscal waking dog will change because there will be another four designs before the outlook on March 26 is presented to the parliament.
Reeves will have the opportunity to rebuild a buffer against the current budget rule through tax and expenditure decisions, which it presupposes the spring declaration.
Forecasts of other places, including the Bank of England, already indicate a difficult economic forecast for the Chancellor.
Boe growth estimate last week holds its growth estimate of 2025 and said that this year the economy is growing by only three quarters of a percentage point under the prediction of the OBR of 2 percent.
The Ernst & Young Item Club, another forecast, predicted growth of only 1 percent in 2025.
The Boe predicted growth of 1.5 percent in 2026, which is also below the latest forecast of 1.8 percent of the OBR.
The estimates of the OBR estimates of the potential growth – the speed at which the economy can be expanded without inflation, and an important input in its forecasts – are also more optimistic than that of other analysts.
While the OBR expects the potential growth to be more than 1.6 percent by the end of its forecast period, the BOE’s own estimate is 1.5 percent lower.
In addition, an increase in the gold -plated yields have further shaped Reeves’ head aircraft since October’s budget, although recovery on the bond market has reduced some of the effects.
Analysts from Oxford Economics, an advisory company, were halved in the cadastrial estate in the cadel room last week due to the movements of the bond prices.
A spokesman for the HM Ministry of Finance said: “The government’s commitment to fiscal rules and solid public finances cannot be negotiable.
“As already announced, the next forecast of the OBR will be presented to the Parliament on March 26. We do not comment on speculation about OBR forecasts. “
A spokesman for the OBR rejected a statement.
