Midway through May the combination of weaker real GDP growth, expectations of higher inflation and interest rates and a jump in gilt yields was set to carve more than £10bn off the headroom to about £13bn, according to Capital Economics estimates. Today the consultancy sees little change to the OBR’s March forecast of £23.6bn of headroom, said economist Ruth Gregory — although this is predicated on the Bank of England making steep cuts to interest rates next year.