Student loan changes risk nearly half UK's fiscal headroom - OBR

FILE PHOTO - A student from University College London (UCL) is seen silhouetted following a graduation ceremony on the Southbank in London, Britain, September 6, 2018. REUTERS/Toby Melville

LONDON (Reuters) - Changes in how student loans are accounted could make it harder for Britain to balance the budget by the mid-2020s, Britain’s Office for Budget Responsibility said on Wednesday.

“We estimate (treating loans partly as grants) could increase the structural budget deficit by around 12 billion pounds or 0.5 percent of gross domestic product in 2020-21,” the OBR said.

“This would absorb almost half the government’s current headroom of 1.2 per cent of GDP against the fiscal mandate, as well as making a balanced budget harder to achieve,” it added, responding to finance minister Philip Hammond’s spring budget statement.

Writing by Elisabeth O’Leary; Editing by William Schomberg