The budget may be six weeks away but the internal debate within the Conservative party over its contents has already spilled out on to the front pages. One might reasonably question whether weeks of briefing, counter-briefing and leaks are the most rational way to set fiscal policy at a precarious economic moment, but this is simply how things are done in Britain, especially in an election year.
Over the next few weeks there will be much talk of the chancellor’s “fiscal headroom” and how it should be deployed. The most important thing to keep in mind is that the entire concept is essentially nonsensical on multiple levels. It is easy to fall into the trap of thinking of this supposed headroom as a pot of money that the chancellor can choose how to spend or even, to use a favoured analogy that will crop up an awful lot between now and March, as a “pre-election war chest”. In reality, what is called headroom is simply the gap between the government’s tax and spending plans and what would be allowed under the fiscal rules, which the government itself sets and which have been changed almost annually over the past decade. Essentially, the chancellor gets to decide how much headroom he has.
