LONDON: British finance minister Philip Hammond may need to use all the budgetary "headroom" he has reserved for himself in the coming years given the uncertainty around the impact of Brexit, the head of a leading economic think thank said.
Hammond announced on Wednesday new budget rules to cut the budget deficit, once adjusted for swings in the economy, to below 2 percent of gross domestic product by the end of the decade - a goal which Britain's official budget forecasters said he was likely to be meet with room to spare.
But the Institute for Fiscal Studies (IFS) said on Thursday this room could easily run out if the outlook for economic growth disappoints in the next few years.
"Given the still very considerable uncertainties over the direction of the economy, (Hammond) may well find he needs all of the headroom he has left himself," Paul Johnson, director of the Institute for Fiscal Studies, said.
Johnson also highlighted a sharp deterioration for living standards in the latest economic outlook drawn up by the independent Office for Budget Responsibility which accompanied Hammond's budget statement.
"On these projections real wages will, remarkably, still be below their 2008 levels in 2021. One cannot stress enough how dreadful that is - more than a decade without real earnings growth," he said in comments he was due to make at a news conference.
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