Healey's first Budget on 28 October faces a £23.6bn buffer eroded by gilt yields
Chancellor John Healey will present the United Kingdom's Autumn Budget on 28 October, the first fiscal event of Andy Burnham's premiership, and the Treasury has signalled he intends a smaller package than the two delivered by his predecessor Rachel Reeves. The Edge, citing Bloomberg reporting on 8 October, described the statement as "tricky", with the prime minister hinting he does not want to repeat the tax rises of recent Labour budgets.
The arithmetic has moved against the chancellor since the date was set. Bloomberg Economics estimates that the surge in gilt yields linked to the war in Iran could remove about £12 billion from the £23.6 billion buffer against the fiscal rules that Healey inherited, according to the same report. Burnham told the New Statesman that the UK had left itself "overexposed" to global bond markets.
The starting point is a tax burden already heading for a record. Reeves's 2024 and 2025 budgets raised taxes by a cumulative £68 billion in 2029-30 on Office for Budget Responsibility projections, lifting the tax take toward 38% of economic output by the end of the decade. Burnham has said officials must be "conscious of the extent to which we have raised revenue" and "get the balance right", while declining to say whether the split between taxing wealth and income is correct until the Budget itself.
Treasury officials have nonetheless examined higher levies on banks, oil and gas companies and gambling, Bloomberg reported, and most economists it canvassed expect Healey to need some revenue measures to close the gap. Labour's 2024 manifesto ruled out raising income tax, VAT or national insurance, a constraint that narrows the field, as Morningstar noted when the Budget date was announced.
Healey, who became chancellor after Burnham took office on 20 July, set the 28 October date within about a week of his appointment. It is the earliest Autumn Budget since 27 October 2021 and roughly a month ahead of Reeves's 26 November statement last year. In a Treasury video he framed the Budget around "fiscal devolution", moving money and decision-making out of Westminster to the regions, and promised it would be built on fiscal discipline and meet the government's fiscal rules.
The external backdrop is unhelpful. Bloomberg reported in August that internal Treasury forecasts warned of a growth downgrade in 2027 if the Middle East conflict continued, and the International Monetary Fund this week projected UK growth of 1.3%. The IMF's chief economist Silvana Tenreyro told the Fund's Annual Meetings that its message for the UK was "simply stay the course and continue on that trajectory", while urging high-debt countries generally to begin fiscal consolidation.
Market commentary ahead of the event has focused on the state pension triple lock, which AJ Bell's Tom Selby estimated costs around £10 billion a year and which he said Healey needs to settle to end speculation. Selby also suggested the chancellor would look for spending commitments to sustain what he called the "Burnham bounce" despite weak growth.
What to watch next: the Budget and the accompanying OBR Economic and Fiscal Outlook on 28 October, which will put a number on the remaining headroom. Gilt auctions and the 10-year yield in the intervening fortnight will show how much further borrowing costs move before the chancellor stands up.
