Sky News Daily Is Rachel Reeves' black hole ‘made up’?
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Nov 12, 2025 Ed Conway, Economics editor known for his insights into public finances, delves into the controversial concept of a fiscal 'black hole'. He explains how this 'hole' is largely a self-imposed issue tied to governmental rules rather than a product of external forces. Conway discusses how fluctuating forecasts and decisions lead to a £22 billion gap, emphasizing its consequences for taxes and spending. He assesses the role of the Office for Budget Responsibility and hints at potential tax rises as the Chancellor grapples with fiscal constraints.
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Black Hole Is A Self-Imposed Rule Gap
- The 'black hole' is a self-imposed metric created by the government's fiscal rules to measure headroom.
- It isn't an objective economy-wide disaster but a gap relative to the rule the government set.
Promises Ate The Headroom Fast
- The £22bn figure reflects promises and U-turns that have eroded the original £9.9bn headroom.
- Broken welfare savings and new commitments can quickly convert headroom into a deficit against the rule.
Growth Downgrades Widen The Gap
- The Office for Budget Responsibility (OBR) downgraded growth expectations, worsening the fiscal gap.
- Lower expected productivity means lower tax receipts and a larger shortfall against the rule.