Reeves<\/a>\u2019 headroom against her main fiscal rule was estimated at \u00a39.9bn in March, but she has been hit by weak economic growth and been forced to U-turn on planned cuts to public spending. <\/p>\n Some economists estimate that the chancellor could face a fiscal hole of \u00a320bn or more by the time of the Autumn Budget, and ministers are preparing the ground for a big package of tax rises.<\/p>\n The IMF said Reeves should make \u201cfurther refinements\u201d to her budget regime, including moving to one Office for Budget Responsibility assessment of her self-imposed fiscal rules each year, at the time of the Autumn Budget, rather than the current twice-yearly review.<\/p>\n The fund also called on Reeves \u2014 whose key fiscal rule requires her to meet day-to-day spending with revenues by 2029-30 \u2014 to boost her fiscal buffer.<\/p>\n \u201cThe first best [option] would be to maintain more headroom under the rules, so that small changes in the outlook do not compromise assessments of rule compliance,\u201d the IMF said. <\/p>\n Responding to the IMF\u2019s Article IV report, Reeves said it confirmed that \u201cthe choices we\u2019ve taken have ensured Britain\u2019s economic recovery is under way\u201d. <\/p>\n \u201cOur fiscal rules allow us to confront\u2009.\u2009.\u2009.\u2009challenges by investing in Britain\u2019s renewal,\u201d she added. <\/p>\n The Financial Times reported this month that Reeves was considering earlier IMF recommendations<\/a> to make changes to her fiscal framework, after she was forced to unveil a \u00a314bn plan to fix Britain\u2019s strained public finances in the Spring Statement in March. <\/p>\n Beyond 2030, the final year of the current five-year forecast period, the IMF warned of \u201ctough fiscal choices\u201d in view of ministers\u2019 pledges not to raise taxes on \u201cworking people\u201d<\/a> and an ageing population. <\/p>\n Unless the government reviewed its promise not to raise VAT, income tax or employee national insurance, \u201cfurther spending prioritisation will be required, to align better the scope of public services with available resources\u201d, the fund said.<\/p>\n It suggested reforming property taxation, ending VAT exemptions and making greater efficiencies, particularly in the health sector \u2014 as well as replacing the \u201ctriple lock\u201d with a policy of indexing the state pension to the cost of living.<\/p>\n Recommended<\/p>\n
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