27th Feb 2025 12:31
(Alliance News) - Rachel Reeves will not make "big" decisions on tax and spending next month, UK Prime Minister Keir Starmer said despite mounting expectations the budget watchdog will provide the chancellor with a difficult set of economic forecasts.
The UK chancellor will respond to the Office for Budget Responsibility's forecasts on March 26, with the watchdog giving its assessment on whether she is meeting her rules for managing the public finances.
Earlier this month the Bank of England halved its forecast for growth to just 0.75% for 2025 and the OBR could also downgrade its expectations.
Weak growth, combined with higher-than-expected borrowing, will put pressure on Reeves to raise taxes or cut spending to meet her "fiscal rules" – which include meeting day-to-day spending through investment and a promise to get debt falling as a share of the economy by the end of the five-year forecast period.
But Starmer indicated to reporters travelling with him to Washington that any changes would be relatively minor.
"We are at the early stages of that, and obviously I am not going to get ahead of myself until we have made decisions," he said.
"But as I have said before, in terms of the big decisions on tax obviously the Budget was the place where we took those decisions – but as ever, going into a statement I am not going to say in advance what we might do and what we might not do.
"But let me not [set] hares running, the big decisions were in the budget of last year and that's the way we are approaching this spring statement."
Official figures last week showed the government had borrowed GBP12.8 billion more than the OBR's forecast for the 10 months to January.
The Office for National Statistics said spending on public services, benefits and debt interest all increased since January 2024.
At the time, Alex Kerr, UK economist at Capital Economics, said: "The OBR is likely to conclude that the Chancellor's headroom against her fiscal rules has been wiped out and she will probably need to tighten fiscal policy as a result."
The OBR has reportedly cut its projections for economic growth in an early version of its forecast handed to the Chancellor this month.
A leak inquiry was launched by the Treasury after Bloomberg reported the forecast.
By David Hughes, PA Political Editor in Washington
Press Association: Finance
source: PA
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