Fiscal Headroom Monitor: More room for tax cuts

Our new Fiscal Headroom Monitor uses a simplified version of the Office for Budget Responsibility’s model to estimate how changes in market interest rate expectations and gilt yields are influencing the scope for the government to announce new policies ahead of, and after, March’s Budget and the upcoming election. Our latest estimate suggests the Chancellor may have enough fiscal space for a pre-election splash at the Budget on 6th March of up to £19bn (0.8% of GDP). We will be updating our estimate regularly and especially if market rate expectations and gilt yields move by a lot.