Haldane warns on economic plan

Andy Haldane, former chief economist at the Bank of England, said the government's economic plan does not work and urged ministers to protect the Treasury's headroom.

What is fiscal headroom?

Headroom is the gap between the government's self-imposed fiscal rules and economic forecasts, potentially leaving less room to deal with shocks or slower economic growth.

Running down insurance at wrong time

Haldane said running down headroom was odd given high borrowing costs and risks from Iran and Ukraine wars. Now is the time to put on more insurance cover, not less.

“Now is the time for this government to be putting on more insurance cover rather than less.”

What Haldane hopes to see

He hoped Chancellor John Healey would unveil a Budget on Wednesday that favours businesses and bond markets by not imposing further taxes and reigning in spending.

But he expects the opposite

Haldane said his expectation was a Budget for backbenchers with further borrowing and tax rises. The government's current path does not work for the economy or bond markets.

“This government, the path it's on, is actually the opposite of that, and I think does not work for the economy or indeed for bond markets.”

Economy grew despite predictions

Last week official figures showed the UK economy grew unexpectedly. Gross domestic product rose zero point one percent in August and zero point seven percent over three months.