Good morning from the City AM liveblog team.
As Rachel Reeves does her maths ahead of the 26 November Budget, she will hope that Labour’s policies have delivered enough growth to limit the number of tax hikes needed to restore her £9.9bn fiscal headroom.
The fiscal black hole facing the Treasury could be between £20bn and £30bn due to higher borrowing costs, productivity revisions and new spending commitments, according to think tanks and City economists.
But the scale of this shortfall will depend on how the UK’s fiscal watchdog, the Office for Budget Responsibility (OBR), scores the country’s economic growth. Its expected productivity downgrade due to an ongoing supply side review could further deteriorate public finances.
The final growth forecasts which the OBR hands Reeves ahead of the November Budget will be key in dictating the amount of tax hikes her Treasury will need to make to balance the books.
Several analysts have warned that various growth-forward commitments – particularly infrastructure projects such as Heathrow’s third runway – are unlikely to boost the economy within the 5-year period covered by the OBR’s forecast.
Read more here on the government’s key policies and the impact they are likely to have on the growth figures informing next month’s budget.
Here’s a summary of our top stories over the weekend:
FTSE suffers worst day since April amid credit market jitters
Reeves seeks to boost UK share ownership in ISA overhaul
Bank of England should cut interest rates at ‘more cautious pace’, Huw Pill urges
Former BT boss in advanced talks to be next chairman of Heathrow
Ferrari cut UK supply after Labour’s tax raid on wealthy
Over half of firms would stop hiring if Reeves hikes taxes, survey finds