Rachel Reeves Has Set Herself a Fiscal 'Trap' Ahead of Spring Forecast, Think Tank Warns
Reeves' spring forecast could turn out to be more consequential than the non-event it was first billed as, according to the IFS. The UK chancellor's commitment to holding one major fiscal event per year may force her to choose between policy stability and her fiscal rules when a relatively minor downgrade to the economic forecasts emerges. Reeves' first budget last year left her with just £9.9bn in headroom to meet a goal of balancing day-to-day spending and tax revenues by the 2029-30 financial year.
- The pressure to manage the fiscal "trap" may lead Reeves to adopt a more cautious approach, potentially impacting her ability to address pressing economic concerns and maintain public trust.
- Will Reeves' decision on policy changes in the spring forecast be influenced by the growing concern among economists about the impact of rising global borrowing costs on the UK's economy?