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Chancellor of the Exchequer Rachel Reeves faces the risk of breaching her fiscal rules early next year, as the Office for Budget Responsibility may declare a fiscal shortfall in her spring economic update. This situation could compel Reeves to deliver an unscheduled mini-budget amid volatile bond markets, following a challenging reception to her previous budget.
Britain faces a looming stagflation crisis as rising costs from increased national insurance, minimum wage hikes, and property rates threaten business profitability. Companies may resort to layoffs to cope, while the Bank of England grapples with the dilemma of maintaining interest rates amid inflationary pressures. With external risks from global conflicts and domestic economic strains, the outlook for growth remains bleak.
A senior official from the UK Treasury has dismissed claims that civil servants broke the law by withholding information about a significant financial shortfall from the Office for Budget Responsibility (OBR). Permanent Secretary James Bowler acknowledged a breach of conduct but emphasized that the Treasury acted legally in its communications with the OBR, highlighting the need to enhance the existing framework.
The UK’s fiscal watchdog has accused Treasury officials of potentially breaking the law by failing to disclose £9.5 billion in unfunded commitments prior to the March budget. Richard Hughes, Chairman of the Office for Budget Responsibility, stated that officials were aware of these obligations but did not reveal them during the budget-drafting process, as required by legislation.
Chancellor of the Exchequer Rachel Reeves faces an £18 billion reduction in her budgetary headroom following an error by the Office for Budget Responsibility (OBR). The OBR corrected its earlier forecast for public sector net financial liabilities, adjusting the projected margin for the 2028-29 fiscal year from £62 billion to £43.9 billion. This revision raises concerns among investors regarding Reeves' upcoming budget plans.
On October 30th, Chancellor Rachel Reeves announced over £40bn in tax increases, marking the largest fiscal raise in decades. The budget also allowed for increased borrowing, resulting in a fiscal easing package worth nearly 1% of GDP, which the Office for Budget Responsibility warns could elevate inflation by 0.4 percentage points at its peak. As markets reacted, gilts experienced a sharp sell-off.
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reeves faces fiscal rule breach and bond market challenges in spring
07:00 30.11.2024
tagflation looms as rising costs threaten uk economic stability
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uk budget buffer reduced by 18 billion after obrs correction
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Britain's budget features significant tax rises and increased borrowing measures
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