Chancellor Prepares for Autumn Budget Decisions

As Britain prepares for its upcoming budget on October 30, the first female chancellor, Rachel Reeves, is under scrutiny regarding her fiscal strategy. Key economic figures set to be released on Wednesday will provide insight into the financial resources available to her. Recent data indicates a stronger-than-expected economic growth, with the Bank of England recently lowering interest rates for the first time in over four years. However, inflation has seen a slight uptick, rising to 2.2% in July. Reeves has committed to maintaining current fiscal targets, including reducing debt as a share of GDP over the next five years and balancing the current budget. Analysts from Investec caution that any significant deviations in borrowing from the Office for Budget Responsibility's (OBR) March forecasts could limit her budgetary flexibility. The chancellor is anticipated to implement tax increases in her inaugural budget, addressing a £21.9 billion government overspend, much of which was inherited from the previous Conservative administration. Unprotected government departments, including local councils and the justice system, are bracing for approximately £20 billion in real-term budget cuts. In response to recent GDP growth figures, former chancellor Jeremy Hunt criticized Reeves, asserting that her attempts to attribute tax increases to her economic inheritance would not resonate with the public. Additionally, the Treasury is expected to cover potential losses incurred by the Bank of England from bond sales, which could amount to an estimated £90 billion.