"The first is that, barring external forces, 2026 should not involve a repeat of this year's fiscal drama. Rachel Reeves more than doubled the margin of error, or headroom, against her fiscal rules at last month's budget, and that should gift the Treasury a quieter 2026. The chancellor's spring statement should be a non-event for another reason, too: she announced that while the Office for Budget Responsibility will still carry out a forecast, it will not formally assess her against the rules."
"The latest flash purchasing managers index for December, published by data provider S&P Global, suggests things could be improving. The reading on its monthly index jumped to 52.1, from 51.2 in November with 50 marking the divide between growth and contraction. In the private sector, S&P said, the rise in new business was the strongest for 14 months and mainly reflected a solid improvement in demand across the service economy."
The chancellor increased fiscal headroom by more than doubling the margin of error against fiscal rules at the budget, reducing the risk of a repeat fiscal crisis in 2026. The Office for Budget Responsibility will still forecast but will not formally assess compliance at the spring statement, allowing policy to remain steady until the autumn budget. Recent monthly indicators show signs of improvement: the December flash PMI rose to 52.1, led by the strongest rise in private-sector new business for 14 months, signalling improving demand in the services sector after a weakening October snapshot.
#uk-fiscal-policy #economic-growth-outlook #purchasing-managers-index-pmi #government-budget-headroom
Read at www.theguardian.com
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