Government finances in surplus but miss forecasts
The UK government's tax receipts exceeded its spending by £15.4bn in January, the largest surplus for the month since records began over three decades ago, but fell short of official forecasts. The Office for Budget Responsibility (OBR) had predicted a higher surplus of £20.5bn. This shortfall has increased pressure on Chancellor Rachel Reeves to meet her fiscal rules, which could require further tax increases or spending cuts.
- The current fiscal rule framework may not be adequate to address the complexities and uncertainties of modern economies, potentially leaving policymakers with limited options when faced with unexpected economic shocks.
- Will the increasing reliance on fiscal rules as a means of maintaining macroeconomic stability lead to a trade-off between short-term stability and long-term economic growth?