A forecast is just a forecast, but the importance of today’s disapproval analysis by the National Institute of Economic and Social Research (NIESR) is that it reflects the scenarios being considered in the treasury before the budget in the autumn.
As I wrote last month, it is not just the accumulation of U-turn, and is a dull economic news that is running another important Treasury moment framing in the autumn.
Chancellor Rachel Reeves can choose to make a strategic decision to reflect current global uncertainties by setting up a much more room for maneuvers to hit the limits of their borrowings.
Currently that buffer is a very tight £ 10bn.
The NIESR report indicates the need to re -establish what a “a big buffer” says against remembering its fiscal rules.
The absence of this called NiesR a “tampering of piece policy”, which gave rise to “prolonged economic uncertainty”.
So now there can be a step towards getting more bad news, people are constantly expecting policy changes to break the loop of people’s doom and increase taxes.
Borrowed rules will be paid for tax income on that day-day government costs, instead of borrowing, loans and loans should fall as part of national income by the end of this Parliament in 2029–30.
NIESR does not recommend changing the rules of new lending, which are only established at this level.
The International Monetary Fund (IMF) and others have flown the idea that the Treasury should actually make a budget change once a year to prevent uncertainty.
The IMF also suggested large buffers as the best idea.
All this matters because it may mean that the first estimate of the need to bridge the budget interval of £ 15-20BN per year with tax growth or cost cuts in autumn is low.
The forecast of the NIESR’s £ 40-50BN gap is on the pessimistic side, and there are still many parts before the autumn, but it shows that the challenge is not easy for the Chancellor.
It is now fixed with most expenses, and political challenges on welfare deductions, which increase the tax as the main lever.
While the government promised not to change the main rates of tax, NIESR VAT, pension allowance, council scope to further increase the revenue through the scope of tax and prolong the freeze in the income tax threshold.
If the niesr is correct, it can be all the above.
Of course, economic news has been added in recent weeks.
We will get more information on Thursday when the Bank of England is ready to cut another interest rate and release its new economic forecast.
And next week, the second quarter are due to the release of important GDP figures and they are expected to show that UK is no longer the fastest growing economy of major G7 economies.
