Rachel Reeves, as chancellor, faces pressure to address OBR forecasts indicating a breach of fiscal rules due to rising government borrowing and inflation. Her spring statement may include cuts to benefits and spending. Former Bank of England deputy governor Charlie Bean suggests she should consider breaching her strict fiscal rules cautiously, as recovery could occur quickly. However, Reeves' commitment to her fiscal policies may limit her flexibility in response to these challenges, especially given her weakened credibility after previous decisions.
Driving the chancellor is a rise in government borrowing costs, weak economic growth and stubborn inflation which are expected to have wiped out all of the 9.9bn headroom.
Even if there were concerns, Reeves could take corrective action in less than three months' time at the spending review, or at the autumn budget.
A more adult way of proceeding would be to allow the rules to be breached with a small miss and acknowledge that forecasts can be volatile.
Reeves has clung tightly to her non-negotiable fiscal rules, and promised not to repeat anything on the scale of last October's tax-raising budget.
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