Chancellor will trim spending plans to meet ‘iron clad’ rulespublished at 09:05 Greenwich Mean Time
Dharshini David
Deputy economics editor
The chancellor has been backed into a corner by her own rules – and economic circumstances.
Those rules, designed to maintain credibility and keep a lid on government borrowing costs – say that in five years, day to day spending (on items such as welfare and public services) has to be matched by income. In other words, taxes.
But as she injected large amounts into public services in the October Budget, the chancellor met the rules with a slim margin to spare – £10bn, or less than 1% of government spending.
And the economy is easily knocked off course. The growth outlook is weaker than in October, partly, some economists say, the result of the chancellor’s own tax rises. This means less money for the public purse than hoped.
Government debt repayments are higher, largely the result of movements in global financial markets.
So that safety margin has likely been wiped out, and to meet her “iron clad” rules, the chancellor will trim some spending plans.
