The growing likelihood that the PSNFL measure of debt will form one of the Chancellor's fiscal rules in next Wednesday's Budget theoretically means she could increase borrowing by £73bn (2.3% of GDP). But this doesn't change what we think will be in the Budget as the real constraint comes from the judgement of the financial markets. We suspect the Chancellor will raise borrowing by a more modest £18bn (0.7% of GDP) to fund more public investment and that the financial markets will deem that acceptable.
We will be discussing the implications of the Budget for the UK economy and financial markets in a 20-minute briefing at 3pm GMT on Wednesday 30th October. (Register here.)
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