What changed
The International Monetary Fund has singled out the UK as the only G7 economy with a serious plan to reduce annual borrowing over the next few years. Managing director Kristalina Georgieva and chief economist Silvana Tenreyro both praised the plan, worth nearly 4% of economic output, ahead of the UK Budget expected in about two weeks.
Why it matters
The praise is good news for the Treasury, but it narrows the room for manoeuvre. To stay on course, John Healey is likely to limit extra spending and tax cuts, while possibly accepting slightly less headroom against the government's debt rules.
That leaves public services facing a difficult trade-off. Inflation is still expected to pressure costs, and higher energy prices are expected to weigh on the economy next year. The government may reserve some room to cushion households from that shock, leaving less available for services and public-sector pay.
The UK is now standing apart from much of the G7: the US, Germany and Japan are increasing borrowing, while Canada and Italy are broadly holding it steady. The immediate prize is less attention from bond markets. If the plans hold, the larger prize could be lower borrowing costs for the government and households.
But the compliments are not a guarantee. The final Budget will show whether the government can preserve its debt-reduction plan while protecting living standards from higher energy bills.
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