Business · Economy · 2 hrs ago
UK budget faces pressure from rising costs and weaker growth
John Healey is due to deliver his first UK Budget on Wednesday as households and businesses face economic pressure.
The conflict in the Middle East has disrupted oil supplies and pushed up fuel prices, while household energy bills are expected to rise again in January.
Inflation has climbed and government borrowing costs are high, making it harder to fund help for people and businesses.
The UK’s fiscal rules require day-to-day public spending to be matched by tax receipts by the end of this parliament, and estimates suggest the government’s financial buffer has shrunk.
The Budget is expected to include cost-of-living support, including more help with energy bills for some households.
The plans are also expected to give local leaders in England more funding and powers to support regional growth.
The independent budget watchdog will publish new economic forecasts alongside the Budget, including its outlook for growth and public finances.
John Healey is due to deliver his first UK Budget on Wednesday amid rising living costs, higher borrowing costs and uncertainty over economic growth.
The Middle East conflict has pushed up fuel prices and is expected to raise household energy bills, adding pressure for cost-of-living support.
The Office for Budget Responsibility is due to publish economic forecasts alongside the Budget, with growth expected to slow in 2027.
The government faces a difficult balance between supporting households and businesses, funding measures and keeping within its fiscal rules.
The Resolution Foundation estimates that the government’s fiscal headroom has fallen from £23.6bn to about £12bn.
- Who
- Chancellor John Healey is due to deliver the Budget. Households and businesses are facing rising costs.
- What
- The UK government is preparing a Budget with cost-of-living measures and plans to address public finances and growth.
- When
- Wednesday, 28 October 2026.
- Where
- The United Kingdom.
- Why
- Rising costs, higher borrowing costs and the prospect of weaker growth are putting pressure on the government’s finances and households.
This story does not have two clearly opposing sides.
UK inflation reached 3.5%, an 11-month high, according to ONS data.
The Evening Standard reported that government borrowing was £24.5bn in September, above forecasts.
John Healey is due to deliver the Budget, with the OBR expected to publish new economic forecasts.
- Fiscal headroom at spring statement
- £23.6bn
- Estimated current fiscal headroom
- About £12bn, according to the Resolution Foundation
- UK CPI inflation in September
- 3.5%
- UK GDP growth in August
- 0.1%
- IMF UK growth forecast for 2026
- 1.3%
- IMF UK growth forecast for 2027
- 1.2%
5 sources
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What people are saying
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