UK Budget 2026: Healey Sets Fiscal Headroom at 15
Last updated 2026-10-28 13:00 UTC. Built from the UK Parliament budget statement (12:30 UTC), LBC live blog, MoneyWeek live blog, and Newsquawk pre-budget analysis.
Chancellor John Healey delivered the UK Autumn Budget 2026 in the House of Commons\
on 28 October 2026, starting at 12:30 UTC. It is the first budget of Prime Minister Andy Burnham's government, which took office in July 2026. Healey confirmed that fiscal headroom has fallen to £15 billion by 2029/30, down from £23.6 billion forecast in March, after rising debt interest costs linked to the Iran war eroded the buffer. The headroom is expected to recover to £22 billion in 2030/31. The Office for Budget Responsibility upgraded its 2026 growth forecast to 1.2%. Healey said: "Providing support for British families and businesses has meant raising some tax to meet my commitment to fiscal discipline."
£15BFiscal headroom by 2029/30, down from £23.6B in March 2026
3.9%National living wage rise, to £13.21 per hour from April 2027
OBR GDP growth forecast 2026
1.2%
OBR GDP growth forecast 2027
1.0%
OBR GDP growth forecast 2028
1.6%
Fiscal headroom 2029/30
£15B
Fiscal headroom 2030/31
£22B
UK debt interest (annual)
£14B additional
Net public debt (2026/27)
~94.8% of GDP
National living wage (21+) from April 2027
£13.21/hr
18-20 national minimum wage from April 2027
£11.27/hr
Workers benefiting from wage rise
2.3M
Energy bill payment (council tax bands A-D)
£100
Households receiving energy payment
20M
10-year gilt yield (at Budget)
~5.34%
Measures announced in the speech
The living wage for workers aged 21 and over rises 3.9% to £13.21 per hour from April 2027, with the 18-20 rate rising to £11.27. Around 2.3 million workers are affected. A £100 one-off energy payment goes to 20 million households in council tax bands A to D this winter, paid directly into bank accounts. Standing charges on household gas bills will be scrapped, expected to save around 60% of households £45 a year on average. The 5p fuel duty cut is extended to July 2027. Mileage allowances for work travel above 10,000 miles rise from 25p to 35p per mile. Import tariffs are removed on more than 100 everyday products including marmalade, gherkins and baked beans, which the government estimates will save families up to £21 a year. The plan to cut the cash ISA limit from £20,000 to £12,000 is reversed; the limit stays at £20,000. A new starter ISA will encourage first-time investors. Business rate small business relief threshold rises from £12,000 to £18,000, exempting around 70,000 additi
What is not known yet
The OBR's full Economic and Fiscal Outlook, with detailed borrowing and growth tables, is published alongside the budget. Final confirmed figures for all tax measures and departmental spending will appear in the full budget document. The Bank of England's November rate decision, which will respond partly to the budget measures and OBR forecasts, is not yet made. The government has not confirmed final implementation dates for the gas standing charge abolition. It is not yet known how much the total net fiscal impact of all measures is once all spending and revenue lines are combined.
"Providing support for British families and businesses has meant raising some tax to meet my commitment to fiscal discipline.
"John Healey - UK Chancellor of the Exchequer (28 October 2026)
What to watch next
- 2026-10-28: OBR press conference at 14:30 UTC with full Economic and Fiscal Outlook published.
- 2026-10-29 onwards: Parliamentary debate on the Budget begins; opposition response from Kemi Badenoch already given.
- 2026-11-06: Bank of England Monetary Policy Committee decision; expected 25 bps rate rise to 4.0%.
- 2026-11 onwards: Gas standing charge abolition implementation date to be confirmed.
- 2027-04-01: New national living wage (£13.21/hr) and state pension rise (£250.70/wk) take effect.
- 2027-04-01: Business rate small business threshold rise (£12,000 to £18,000) takes effect.
How we know this. Budget speech: UK Parliament official budget statement, House of Commons, 28 October 2026, 12:30 UTC (parliament.uk). Living wage and energy figures: LBC live blog and KentOnline live budget coverage. OBR GDP forecasts: MoneyWeek live blog, confirmed against Newsquawk pre-budget analysis. Fiscal headroom figures: multiple pre-budget sources (Newsquawk, MoneyWeek) and confirmed in speech. Market reaction (gilt yield): FXStreet and TMGM budget analysis. Cover: Houses of Parliamen
