Analysts say ahead of the UK chancellor's speech today that restoring most of the country's fiscal buffer is necessary to reassure bond investors. UK fiscal headroom has shrunk by roughly half from the £23.6 bln left by the previous chancellor after a global selloff in UK bonds; returning to that level would likely require tax increases and spending cuts. Economists warn the measures would be politically unwelcome for the new government but are seen as necessary to re-establish fiscal credibilit

Analysts say ahead of the UK chancellor's speech today that restoring most of the country's fiscal buffer is necessary to reassure bond investors. UK fiscal headroom has shrunk by roughly half from the £23.6 bln left by the previous chancellor after a global selloff in UK bonds; returning to that level would likely require tax increases and spending cuts. Economists warn the measures would be politically unwelcome for the new government but are seen as necessary to re-establish fiscal credibility; failure to present a credible fiscal strategy amid current market stress could be very costly.