UK think tank says Reeves 4.4 billion pounds in the red on fiscal rules.
British finance minister Rachel Reeves’ headroom for meeting her budget rules has probably turned into a 4.4 billion-pound ($5.7 billion) deficit, requiring tough measures next week to get her back on track, a think tank said on Monday.
The Resolution Foundation called on Reeves to tread carefully with any reductions to welfare spending – which are expected to feature in her budget update speech on March 26 – and to consider tax increases instead.
“The UK’s economic outlook has declined markedly since the budget last autumn,” James Smith, research director at the Resolution Foundation, said.
“Weaker growth and higher interest rate expectations look set to turn the UK’s projected current surplus of 10 billion pounds into a deficit of around 5 billion pounds.”
Britain’s budget watchdog, the Office for Budget Responsibility, is expected to cut its 2.0% economic growth forecast for 2025 sharply. The Bank of England last month slashed its projection to 0.75% and the Resolution Foundation predicted a similar figure.
The public finances have also been strained by higher-than-expected borrowing costs in global financial markets driven largely by the economic policies of U.S. President Donald Trump.
Source: Globalbankingandfinance
