How much fiscal ‘headroom’ will the next government have?

If the polls are correct and Labour wins the election, the policies it implements and when it implements them will depend in part on the ‘headroom’ against the fiscal rules it is given by the Office for Budget Responsibility (OBR). We suspect the next government may be handed a bit more headroom by the OBR, perhaps £16bn (0.6% of GDP), up from £8.9bn (0.3% of GDP) at the March Budget. That would allow it to reverse some of the scheduled spending restraint, or the freeze on personal tax thresholds, but not both.

We’ll be discussing the outcome of the UK general election in a 20-minute online briefing at 9.30am BST on Friday 5th July. (Register here.)