LONDON, Oct 28 (Reuters) – Britain’s government will have a smaller buffer to meet its fiscal targets by the end of the decade, finance minister John Healey said in his first budget speech on Wednesday, citing forecasts from the Office for Budget Responsibility.
The government’s tax revenues were expected to be £15 billion ($20 billion) higher than day-to-day spending in the 2029/30 fiscal year, Healey said. He said the buffer is expected to rise to £22 billion in 2030/31.
He said the government will meet its fiscal targets despite shocks from the Iran war.
“That’s what a buffer is for. Use it when you need it. Rebuild it when you can,” Healey said.
“So, despite the global challenges, this Budget puts us on track to eliminate the current budget deficit and get Britain’s finances into the black within 3 years.”
At the time of former finance minister Rachel Reeves’ budget update in March, the OBR estimated the government had £24 billion of so-called fiscal headroom.
A Reuters poll of bond dealers earlier this month pointed to £15 billion of headroom as higher borrowing costs weighed on the government’s spending.
($1 = 0.7527 pounds)
(Reporting by David Milliken and Andy Bruce; writing by Suban Abdulla; Editing by Toby Chopra)
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