Chancellor Rachel Reeves remains committed to holding just one major fiscal event each year, despite recent concerns over potential breaches of her fiscal rules due to weak economic growth.

Data from October showed the UK economy contracted by 0.1%, following a similar decline the previous month. This downturn raises the risk that the chancellor may not meet her fiscal rule of funding day-to-day government spending through tax revenues by 2029-30. Current projections show a slim £9.9 billion margin, leaving her plans vulnerable to downgraded growth forecasts or rising borrowing costs.

The Office for Budget Responsibility (OBR) will release updated forecasts in the spring, assessing whether fiscal rules are on track. Treasury officials have made it clear that Reeves will not hold an emergency tax-raising Budget in the spring, reiterating her focus on the autumn Budget as the sole fiscal event each year. If fiscal tightening is needed in the spring, it is expected to take the form of spending cuts.

“We’re not going to pre-empt the forecast; however, no one should be under any doubt of the chancellor’s commitment to economic stability and sound public finances,” a Treasury spokesperson said. “That is why meeting the fiscal rules is non-negotiable, and we will plan for all scenarios.” They added that the chancellor is focused on economic growth and reducing inefficiencies in public spending through the next phase of the spending review.

Reeves reinforced this stance in comments to the Daily Mail, saying, “I’m not going to be going back in the spring. That’s what the previous government did. They did a Budget and then came back six months later.” However, Treasury officials noted that she has left open the possibility of additional tax measures in next year’s autumn Budget.

The chancellor has also sought to differentiate her approach from previous administrations. Speaking at the Confederation of British Industry (CBI) conference last month, she stated, “I’m not coming back with more borrowing or more taxes,” a remark understood to exclude such measures for the remainder of the parliament. However, officials later clarified that she has not ruled out future options.

Ruth Gregory of Capital Economics warned that if economic weakness persists, the chancellor’s fiscal headroom could shrink further. She estimated that a 0.7% lower GDP forecast compared to October’s projections could wipe out Reeves’s £9.9 billion margin, potentially leaving no room for fiscal maneuvering. However, Gregory added that the OBR may view the current economic challenges as temporary, mitigating the long-term impact on fiscal planning.

Reeves has expressed a desire to move away from the Treasury’s recent practice of preparing two major fiscal events per year. Instead, she wants officials to focus on boosting economic growth over the next six months.

Nevertheless, the chancellor is expected to deliver a pared-down economic update in the spring, alongside the OBR forecasts, similar to the spring statements of former chancellor Philip Hammond.