UK Treasury Weighs Smaller Fiscal Buffer to Limit Tax Increases in Budget
Debate Over Fiscal Buffer and Tax Policy in Upcoming UK Budget
Sept 23 (Reuters) - British finance minister John Healey may accept a smaller fiscal buffer to reduce tax rises in next month’s budget as investors signaled the gilt market would not be spooked by a more modest headroom target, the Financial Times reported on Wednesday.
Government Discussions and Fiscal Buffer Options
• The Treasury and Downing Street are debating whether to set a lower buffer in the budget than the government's fiscal watchdog forecast in March, the report said, citing people familiar with the discussions.
Potential Headroom Figures Considered
• One person involved in the government’s discussions suggested that headroom of £15 billion ($19.85 billion) would be enough, while another suggested closer to £20 billion, and a third person said no figure was yet being targeted, the report added.
Pressure on Healey to Meet Fiscal Rules
• Healey, who is set to present his budget next month, is under pressure to show how he can meet his fiscal rules without raising the main taxes.
Treasury Response and Market Implications
• The Treasury declined to comment on the report.
Exchange Rate Context
($1 = 0.7556 pounds)
Reporting Credit
(Reporting by Gnaneshwar Rajan in Bengaluru)