The Chancellor took a gamble in the Autumn – and the worry now is that gamble is not over, writes economist Duncan Weldon.
At her first fiscal event the Chancellor went big: annual government spending received a £70bn increase with around half of that funded by rises in taxation (with the burden disproportionately falling on business) and half by increased borrowing. The government hoped to front load the pain of tax rises into the first budget of the Parliament the messaging was very much that this was a ‘one and done’ tax increase rather than the beginning of a process. But the Chancellor left herself with just £9.9bn of ‘headroom’ to meet her target to balance the current budget (i.e. excluding capital spending) by 2029/30. In fiscal terms £9.9bn does not amount to very much. Indeed the average wiggle-room against their fiscal rules which chancellors have left...
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The Chancellor took a gamble in the Autumn – and the worry now is that gamble is not over, writes economist Duncan Weldon.
At her first fiscal event the Chancellor went big: annual government spending received a £70bn increase with around half of that funded by rises in taxation (with the burden disproportionately falling on business) and half by increased borrowing. The government hoped to front load the pain of tax rises into the first budget of the Parliament the messaging was very much that this was a ‘one and done’ tax increase rather than the beginning of a process. But the Chancellor left herself with just £9.9bn of ‘headroom’ to meet her target to balance the current budget (i.e. excluding capital spending) by 2029/30. In fiscal terms £9.9bn does not amount to very much. Indeed the average wiggle-room against their fiscal rules which chancellors have left...
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