Chancellor of the Exchequer John Healey had to tread carefully in his debut budget this week, given the state of Britain’s public finances. A year from now, however, he could find himself standing at the despatch box with billions of extra pounds at his disposal.

The official forecasts underpinning Healey’s budget were surprisingly subdued compared with the current expectations of many private sector economists — meaning he could be in charge of a much brighter budget if they are subsequently revised up.

Jim O’Neill, who has previously advised Prime Minister Andy Burnham, said Thursday he was “baffled” by the forecast. “It is almost like the Office for Budget Responsibility hasn’t paid any attention to the past three months’ worth of data,” he told Times Radio.

For sure, the fiscal watchdog did not include a recent run of bumper UK data. The OBR completed its economic forecasts in early September before the publication of unexpectedly strong July and August GDP figures and an upgrade to estimates for the second quarter. Economists said it makes the OBR’s 1.2% growth forecast for 2026 far too downbeat, likely requiring a contraction in the final quarter to prevent the UK enjoying its strongest expansion in four years.

Parts of the private sector are much more upbeat with forecasters at JPMorgan and Goldman Sachs expecting growth of 1.6% this year and 1.5% in 2027.

“There’s a better chance that he gets a surprise windfall than there has been in recent fiscal events certainly,” said Andrew Goodwin, chief UK economist at Oxford Economics. “If you’re looking at risks, it was always that borrowing would be higher. Now those risks are much more balanced, and certainly it’s much easier to find reasons why spending might be lower and why receipts might be higher.”Some parts of the forecast looked too optimistic, such as energy prices this winter, but overall the outlook appears to have improved.

Wages could rise more strongly than the OBR expects as workers try to compensate for higher inflation. The watchdog has frequently underestimated the strength of pay growth historically, though its chair Jonathan Haskel justified the projection by saying companies are likely to hold down pay to rebuild their margins.

Borrowing costs could also be lower if the Bank of England does not deliver the four or five interest-rate hikes expected by markets. The BOE’s own rate-setters have suggested it won’t tighten to that degree.

In addition, Healey will get extra money from his fiscal target rolling on a year, with Wednesday’s forecasts implying a £7 billion boost on his aim to balance day-to-day spending with tax revenue.

“There’s a positive scenario which is pay growth is a bit better than we expect, all else equal growth is a little bit stronger, and market pricing is a little bit more favorable,” said Matthew Swannell, chief economic adviser to the ITEM Club. “That is a totally plausible set of outcomes... obviously, the global picture is really important in determining which path the economy goes down.”Much of the forecast is likely to hinge on what happens in the US-Iran war and how quickly the development of AI translates into stronger economic growth and productivity.

The OBR currently assumes AI boosts productivity growth by 0.2 percentage points a year in the medium term but conceded the scale and timing of any effect is highly uncertain.

David Miles, a senior official at the OBR, acknowledged the potential upside, telling Bloomberg TV that the risks are “symmetric.”

“We could certainly get some good news,” he said. “It could be that energy prices, for example, fall very sharply between now and Christmas in which case our assessment, when we get to spring, could be the so-called headroom number is a lot larger.”