UK Builds Bigger Fiscal Buffer In Budget Report Released Ahead Of Parliament Speech

Chancellor of the Exchequer Rachel Reeves expanded her key fiscal buffer to £22 billion ($29 billion) from £9.9 billion in March, the official budget watchdog said, in an analysis released ahead of her speech in error.

The headroom figure was the most achieved in a British spending plan since March 2022 and well in excess of the median estimate of £15 billion from the banks surveyed by Bloomberg. The key metric was released as part of an unprecedented early publication of the Office for Budget Responsibility's budget analysis.

Confirming the authenticity of the release, the OBR said the link to its forecasts went live on its website “too early.” It apologized for the error and said it had launched an investigation.

Gilts swung between gains and losses as traders tried to digest mixed message from the report. While the fiscal buffer was higher than expected, growth was downgraded across the forecast to reflect lower productivity.

Those effects were offset by the impact of higher inflation and stronger wage growth on public finances.

Other measures evident from the leaked document were an extra tax on homes valued at £2 million or more, and an increase to taxes on property and savings income by 2 percentage points.

Pension contributions above £20,000 will not longer be exempt from National Insurance Contributions, the document said, while employer NIC thresholds will be frozen for three years from 2028-29.

In addition, the government will introduce a mileage-based charge on electric vehicles from 2028. The fuel duty freeze will be renewed until September 2026.

Writedown allowances for corporate tax will be cut, raising £1.5 billion.

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