“This concludes a mixed set of results for the first half of the 2023/24 financial year. The cumulative deficit of £82bn continues to trend below the Office for Budget Responsibility's forecast from March as higher inflation benefits tax receipts, but it remains on track to be well above where it was expected to be only a couple of years' ago.
“The cancellation of northern HS2 routes is likely to result in a relatively small reduction in spending in the second half of the financial year, with the government continuing to search for other savings to offset higher than anticipated spending on debt interest and inflationary pressures on costs.
“Next month's Autumn Statement should provide some insight into how well the Prime Minister and the Chancellor are reshaping the expenditure lines in the forecast spreadsheet, as well as key decisions on pensions and welfare benefits. Although tax cuts have been ruled out for now, the Chancellor's focus remains on creating sufficient headroom in the medium-term to be able to announce tax cuts in in March 2024.”
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