Weekly Economic Briefings - Uk Weekly Economic Briefing
With the OBR planning to downgrade its expectations for productivity growth, the Chancellor could find that he loses more than half of his margin for error against his fiscal rules in next month’s Budget. If we also factor in the failure to enact some of the policy measures from March’s Budget and the promise to relax the public sector pay cap, Philip Hammond faces some tough decisions. Though some small, targeted revenue-raising measures, may be implemented, it would represent a major gamble if the Chancellor were to do more to try to restore the lost headroom. The next two fiscal years will already see further deep spending cuts and though this week’s activity data offered some rare good news, the period of sluggish growth is likely to have further to run.