UK autumn budget breakdown: What to know

Healey kept a thin £14.5bn buffer against the fiscal rules, down from £23.6bn at the spring statement, rather than rebuilding the headroom the energy shock wiped out.

Tax rises were limited to £7.5bn by 2031-32, mostly through raising compliance to close the tax gap, a higher bank surcharge, and higher taxes on property and savings income. But the tax burden will still reach a record 38.6% of GDP.

Spending was focussed on cost-of-living measures that will provide ‘breathing space’ at the margin, especially to lower-income households. But they take only about 8bps off inflation, so we still expect the Bank of England to raise rates next week and in February.

Gilt yields moved slightly lower because the budget largely ‘did no harm’, even though planned gilt issuance of £251bn was a bit above expectations.

Harder decisions on defence spending, welfare reform and backloaded spending cuts were pushed to the 2027 spending review, which adds to fiscal risk and may raise prospects of an early election.

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