Will Rachel Reeves to bend its financial rules to help achieve a balance between books?

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Rachel Reeves was Egyptian. After announcing 40 billion pounds of high taxes and 70 billion pounds in additional public spending in its first budget last October, the Chancellor told a commercial audience that she drew a line in the sand.

“I am really clear, I am not returning with more borrowing or more taxes,” she said to the Organization of Employers at the Central Bank of Iraq, and she insisted that public financial resources are now in full swing.

These words did not advance well, as Reeves face a summer of speculation that they will have to increase taxes or borrow – or both – to stay within the fearful boundaries of its financial bases.

Reeves won some comfort from the International Monetary Fund on Tuesday, who said that the financial strategy of the counselor was “credible and friendly to growth.” But she also warned of the presence of “great risks” associated with its delivery, which leads to additional tax rise or necessary spending discounts “if shocks arise.”

The International Monetary Fund, which spends weeks speaking to the treasury before its annual production, “Article 4” of health on the British economy, suggested that Modify the financial framework in the United Kingdom To enhance “policy stability” between budgets.

Problems accumulate: Borrowing costs The consultant’s attempts to provide money by cutting advantages to fierce opposition from the public representatives and the workers ’party, whose tolerance with the cuts seems to have exhausted.

Last week, Sir Kerr Starmer declined in the government’s 1.5 billion pounds plan to restrict the number of retirees receiving winter fuel payments. Now he looks forward to reducing the ceiling of interest with a conservative age, at a cost of up to another 3.5 billion pounds.

Add to those expectations of slow -term average growth, commercial wars Donald Trump and a possible reduction in productivity expectations by the budget responsibility office and Rivers’s difficulties become clear.

Some economists believe that the fake head hall of Reeves 9.9 billion pounds against its financial bases will be removed, which leaves them to find billions of pounds to continue to balance books.

“It is certain that the (financial) rules will move,” said Stephen Milard, the temporary director of the National Institute for Economic and Social Research. He added that obtaining public financial affairs to the correct path was a problem for the consultant, given its commitment to not raising any of the “three adult” taxes – income tax, national employees insurance and value -added tax.

He added: “If the chancellor wants to coincide with the spending that she is currently planning … I will tend to increase the income tax rate at least, if not the primary rate.”

“It is imperative that you have to raise taxes, because what I cannot see is discounts in spending.”

Isabelle Stockon, a senior economist at the Institute of Financial Studies, said that the government can still obtain a “lucky”, but it is certain that something else must have to give “to accommodate permanent increases in public spending, such as canceling the benefit of the child’s benefit.

“There are many options, but it is always difficult to raise fundamental amounts in a predictable way without touching the three major taxes,” they added.

Reeves allies insist that the chancellor will not use her budget in the coming fall to free it from Straitjacket financial by linking its financial rules. One of them said: “They are not negotiable.” Reeves called them “covered iron”.

But the International Monetary Fund suggested that OBR in the future is only one annual evaluation of the financial rules – at the time of the budget – instead of twice a year.

The fund wants to stop continuous general speculation about the financial “head hall” and it is possible that the tax increases that it believes are responsible for the poor decisions in the government. International Monetary Fund officials note that there is no other country obsessed with small movements in its public financial resources.

The treasury will love to see that this happens, according to government officials, to avoid this type of chaos that accompanied the Rabie Reeves statement in March, when it was forced to achieve 14 billion pounds of savings at the last minute to stay within its financial bases after the worsening of the OBR expectations.

James Smith, director of research at the Decision Corporation, said the problem was not only a specific goal, but also a “very historical low level” of the head room, which means that any shock requires the government to tighten policy.

Evaluating whether the government is currently fulfilling its financial bases is a mandatory duty for OBR every time it produces a prediction under the 2011 Parliament Law. This may need change, although the government amended OBR duties in 2024 with additional legislation.

Although this may help the chancellor avoid more tax increase in her spring statement for the year 2026, he does nothing to help her stop the hook when it comes to this year’s budget, which seems more problematic that day.