British Finance Minister Jeremy Hunt said earlier this month the U.K. would not enter a recession this year.
Hannah Mckay | Reuters
But he must also navigate the constraints of fragile public finances and a stagnant economy that recently entered a modest technical recession.
On the upside, inflation has fallen faster than anticipated and market expectations for interest rates are well below where they were going into Hunt’s Autumn Statement in November.
“On balance, we think Chancellor Hunt’s fiscal headroom will have likely increased – but only marginally, and nowhere close to what he had in the Autumn Statement (owing largely to the fall in expected debt costs),” Deutsche Bank Senior Economist Sanjay Raja said in a research note Thursday.
The German lender estimates that the government’s fiscal headroom will have grown from around £13 billion ($16.46 billion) to around £18.5…
