Politics · United Kingdom · 1 hr ago
IFS warns UK budget must address £35bn in spending pressures
The Institute for Fiscal Studies says John Healey must set out how the UK will deal with £35bn in spending pressures in his 28 October budget.
Higher inflation is raising the cost of public services and borrowing, while also increasing tax revenue.
The government must choose whether to add money to department budgets, make efficiency savings, raise taxes or borrow more.
If it leaves spending plans unchanged, services may have less money in real terms, which could mean cuts to their quality or quantity.
The IFS says plans that rely on unannounced cuts or postpone decisions until next year’s spending review would not be credible.
This matters because the government’s plans are being watched by financial markets, where higher borrowing costs are adding pressure.
Healey’s budget is expected to set out how he will address the pressures and meet the government’s fiscal rules.
The Institute for Fiscal Studies warned that the UK budget must address £35bn in spending pressures.
The IFS said higher inflation could force the government to top up public-service budgets or accept real-terms cuts.
It warned that plans relying on implicit cuts the chancellor would not deliver could make the budget “a work of fiction”.
The budget is scheduled for 28 October.
Higher borrowing costs could reduce the £24bn fiscal buffer left at the spring statement, though the IFS estimated the net reduction could be £4bn.
- Who
- The Institute for Fiscal Studies warned Chancellor John Healey about the spending pressures.
- What
- The IFS said the budget needs a clear plan for £35bn in spending pressures.
- When
- The budget is scheduled for 28 October. The article was published on 12 October 2026.
- Where
- The United Kingdom.
- Why
- Higher inflation is squeezing the government’s spending power, while borrowing costs are expected to rise.
This story does not have two clearly opposing sides.
Simply pencilling in implicit cuts that he has no intention of delivering would make the budget a work of fiction.
If John Healey sets out spending envelopes for public services that he would not be willing to live within, his plan for meeting the fiscal rules will not be credible.
must be credible and be seen as such by financial markets
Andrew Bailey needs to focus on doing his job.
The war in the Middle East began, and market moves since then were expected to affect the government’s borrowing costs.
Bank of England governor Andrew Bailey said fiscal policy must be credible and be seen as credible by financial markets.
The Times quoted a government source responding that Bailey needed to focus on doing his job.
John Healey is due to deliver the budget.
- Spending pressures
- £35bn
- Fiscal buffer at spring statement
- £24bn
- Possible increase in borrowing costs
- £10bn in 2029-30
- IFS estimate of headroom reduction
- £4bn
- Budget date
- 28 October
Sources
Related news
Burnham says Russia interfered in 2016 Brexit vote
Campaigners say minister’s amendments weaken Holiday Hunger Bill
Burnham to argue for closer UK ties with the EU
Ministers plan cuts to heat pump grants to help fund defence spending
Burnham to urge MPs to pursue closer ties with the EU
UK ministers explore mandatory AI safety reporting
Minister calls for banks to stop charging small businesses card fees
Burnham pledges to publish details of his dealings with Manchester City
Polanski vows to stay as Green leader after by-election loss and party row
Labour holds Starmer’s former London seat, defeating Green leader Zack Polanski
UK prisoners face early release as official numbers remain unclear
