Higher borrowing costs and rising inflation are likely to have cut Healey’s fiscal room for manoeuvre from the £23.6bn forecast by the Office for Budget Responsibility in March to about £12bn, according to the estimates.
Government figures say the purpose of the headroom is to act as a “contingency fund” to be drawn down in extraordinary circumstances such as the Middle East war.
Iran war blows near-£12bn hole in Britain’s public financesft.comFT estimates show inflation and soaring borrowing costs have slashed chancellor John Healey’s headroom in half