Chancellor's second Budget to be about as big as her first

Reports that the Chancellor will leave herself with more headroom and that the Office for Budget Responsibility will downgrade its productivity forecasts by more than we were anticipating suggest the Chancellor will raise taxes by around £38bn in the Budget on 26^th November, which is more than we previously thought. A larger fiscal tightening will be a bigger drag on the economy, but will also be a bigger drag on inflation.

That said, we still expect the Bank of England to leave interest rates on hold at 4.00% next Thursday. We will be reacting to the Bank’s decision in an online briefing at 3pm GMT on Thursday. Register here. We are also hosting an online briefing on the outlook for the housing market at 9am GMT on Tuesday. Register here.