Governments set their own fiscal rules to maintain credibility with financial markets, and compliance with these rules is assessed by the independent Office for Budget Responsibility (OBR). While self-imposed, breaching these rules can result in higher borrowing costs.
While Hunt claims higher interest rates due to inflation have raised borrowing costs, they have also boosted government revenues from VAT and income tax.
Economists estimate the chancellor could have over £10 billion of fiscal headroom, but it ultimately depends on the OBR's assessment. How the government uses this headroom is determined by policy choices aligned with political priorities and economic performance.
Tax cuts are not "impossible" but rather a matter of choice. Timing also plays a role, with the possibility of a general election and spring Budget affecting when fiscal measures are introduced.
The Autumn Statement may focus on longer-term measures, such as leveling up, boosting the workforce, and addressing economic growth, as part of the government's election strategy. Tax cuts could be considered in the spring, depending on the circumstances.