Reeves faces 'difficult balancing act' as £26bn required to maintain headroom

GDP growth is set to slow to 1.2% towards the end of 2025, and to 1.1% in 2026, stated KPMG's UK Economic Outlook today (22 September). Inflation is expected to rise to 4% over the next few months and stay there for the rest of the year before dropping to the Bank of England's 2% target in the middle of 2026. The report stated that Reeves "faces a difficult balancing act" with greater spending pressures potentially requiring tax hikes in the future. Policy changes, such as the reversal of planned welfare cuts and changes to winter fuel payments, and overly optimistic forecasts from...