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Economy
Apr 28, 2026
Analyzed by Llama- 4 Scout 17B 16E Instruct

UK Peers Urge Rachel Reeves to Increase Fiscal Buffer

AI Summary
A House of Lords committee has urged UK Chancellor Rachel Reeves to increase her fiscal buffer to a 'significantly larger' size, warning that the UK's public debt is on an unsustainable trajectory.

The Call for a Larger Fiscal Buffer

Rachel Reeves should aim to run a 'significantly larger' buffer against her fiscal rules, according to a report from a House of Lords committee that says the UK's public debt is on an unsustainable trajectory.

The Current Fiscal Buffer

The chancellor raised taxes at last year's budget in order to more than double the 'headroom', or buffer, against her fiscal rules to £22bn – some of which is expected to be eroded by the impact of the Iran war.

The Committee's Recommendations

But the Lords economic affairs committee says Reeves should aim to raise it more, and complains that she and her recent predecessors have tended to allow themselves too little room for manoeuvre, compared with the £30bn average between 2010 and 2022.

  • The committee criticises successive governments for treating fiscal buffers as 'war chests' to be run down to a minimum.
  • They call for a stricter interpretation of Reeves's second fiscal rule, on debt.

The Impact of the Fiscal Buffer

The high-powered committee, chaired by the Labour peer Stewart Wood, includes the former Treasury permanent secretary Terry Burns, the economist Alison Wolf, and the former chancellor Norman Lamont.

They warn that the UK is on a path to unsustainable debt levels, echoing recent warnings from watchdog the Office for Budget Responsibility (OBR).

The Future Outlook

The peers call for more attention to be paid to the OBR's annual 'fiscal risks and sustainability report', including a House of Commons debate led by the chancellor.

A Treasury spokesperson said: 'The UK has one of the most robust fiscal frameworks in the world which helps maintain economic stability while unlocking £120bn of investment in our future infrastructure with disciplined day-to-day spending.'