Budgets & fiscal events· Public finances Hitting the buffers Previewing the key decisions for Autumn Budget 2026 in the context of another rise in the cost of living 13 October 2026 Hannah Aldridge Matthew Cavanagh Nye Cominetti Ruth Curtice Zachary Leather Jonathan Marshall Cillian Sheehan James Smith This briefing note previews the key decisions facing the Chancellor at Autumn Budget 2026. It assesses how the economic backdrop is likely to affect the OBR’s fiscal forecasts, and sets out how the Government should respond to the twin challenges of another rise in the cost of living and stretched public finances. The UK economy has been more resilient than expected, growing by 1.1 per cent in the first half of 2026, the fastest rate in the G7. But conflict in the Middle East has once again pushed up energy prices and interest rates. Household energy bills are expected to rise to around £2,000 from January, close to the peak reached after Russia’s invasion of Ukraine. At the same time, higher borrowing costs mean we estimate debt interest spending will be higher in 2029-30 than forecast in March, halving the Chancellor’s headroom to £12 billion. The Government appears to want a low-key Budget, but two challenges cannot be ducked. With little scope for extra borrowing, cost of living support must be targeted and temporary, focused on families struggling to heat their homes or pay rent. And the Chancellor should rebuild headroom to at least £20 billion, keeping a tight grip on spending and raising around £8 billion from tax reforms that also improve the system.
