Chancellor John Healey delivers his first Budget today, expected around 12:30, and the Office for Budget Responsibility (OBR) will publish its updated forecasts the same day. Healey confirmed the date in a Treasury release on the 31st of July: “Today, I’m confirming the date of my first Budget as Chancellor will be Wednesday 28th October.” The statement is expected to follow Prime Minister’s Questions.
The fiscal test
The OBR, the government’s independent forecaster, will publish a five-year forecast to 2031/32 for the first time. Healey has said: “It will meet our fiscal rules. It’ll give businesses and families some of the stability they need to plan for the future.”
The rules require day-to-day spending to be funded by tax receipts and debt to fall as a share of the economy in 2029/30. The House of Commons Library says the government is committed to meeting them “with a buffer”.
Estimates of that buffer, known as headroom, vary. The Resolution Foundation puts it at about £12bn, the Institute for Fiscal Studies about £20bn and EY about £11bn. The OBR’s March forecast is put at about £24bn. All are outside estimates. The Labour manifesto rules out rises in National Insurance, income tax and VAT.
The package and the backdrop
Some everyday measures are already announced, including tariffs removed on more than 100 food products and a permanent 55p mileage rate for the first 10,000 miles. Others are reported rather than confirmed.
| Measure | Status |
|---|---|
| Fuel duty held at 52p a litre for a 16th year | Reported |
| National living wage from £12.71 to £13.20 | Reported, subject to confirmation |
| Bank surcharge could rise from 3% to 8% | Reported as under consideration |
| Capital gains tax rise | Reported as ruled out |
The TUC says the surcharge move would raise £2.25bn a year, while financial sector representatives warn it could discourage investment, PA Media reports. That puts Lloyds, Barclays and HSBC in focus. Over £1bn for social and affordable housing is also reported, which touches Taylor Wimpey.
The 10-year gilt yield closed yesterday at 5.3539%, against 4.9707% on the 28th of April, about 0.4 percentage points higher. Bank Rate is 3.75% and UK inflation rose to 3.5% in September from 3.1% previously. Sterling was at 1.32943 against the dollar at 9:31am today, down 0.09% on yesterday’s close.