Key Takeaways
- Later this week the UK Chancellor, Rachel Reeves, will present her Spring Statement, which includes a fiscal outlook and public spending plan.
- The Chancellor’s fiscal rules aim to balance current spending with taxes, but high public debt and interest rates make this challenging.
- The Office for Budget Responsibility’s preliminary update showed that lower growth and higher debt interest have tightened the fiscal space.
- To address the fiscal challenges, the government may need to target welfare cuts, increase taxes, and ease the primary fiscal rule.
- Despite the challenging outlook, falling energy prices could boost economic growth and help lower interest rates in the future.
