Key findings

  • Wednesday’s Budget may be a little light on big policy announcements – particularly following the decision not to press ahead with pension tax relief reform. But the fiscal projections provided by the OBR will be watched with interest: even relatively small changes in the underlying economic outlook could threaten the fiscal mandate.
  • Any deterioration in the medium-term outlook will leave the Chancellor with difficult choices. If the revision is sizeable enough, he will face the prospect of being adjudged as being off course on his fiscal mandate of achieving a surplus in 2019-20. But even if the adjustment is more modest, he is likely to want to take action in order to maintain a buffer against inevitable in-year movements in borrowing over the course of the parliament – otherwise he faces the risk of needing to implement in-year spending cuts in the run-up to the next election.
  • He has already announced that the changing economic backdrop means that he will be implementing further spending cuts in the order of £4 billion on Wednesday. We may hear about plans for tax rises too.
  • Given this context, the need to find an additional £5 billion to fund pre-election tax cut pledges appears unreasonable. We hope that he chooses to cancel these highly regressive promises – instead diverting funds back into supporting lower income working households via UC.

Further reading

Happy new tax year 2026
Putting tax and social security changes in the context of rising energy bills
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Lalitha Try
Understatement of the year
Putting the 2026 Spring Forecast in context
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Hannah Aldridge, Mike Brewer, Elliott Christensen, Tom Clark, Alex Clegg, Nye Cominetti, Ruth Curtice, Julia Diniz, Sophie Hale, Lindsay Judge, Zachary Leather, Jonathan Marshall, Charlie McCurdy, Louise Murphy, Simon Pittaway, Cillian Sheehan, Hannah Slaughter, James Smith, Imogen Stone, Jamie Titus-Glover, Lalitha Try
Fiscal events and how to avoid them
Spring Forecast 2026 preview
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Elliott Christensen, Charlie McCurdy, James Smith
Stephen Clarke
Stephen Clarke
David Finch
David Finch
Matthew Whittaker
Matthew Whittaker