Pressure mounts on Healey as UK fiscal headroom forecast to drop to £12bn

KPMG outlook

clock • 2 min read

The government is likely to face pressure to further raise taxes on wealth in the upcoming Autumn Budget, as the conflict in the Middle East and sluggish growth almost halved its fiscal headroom, according to KPMG.

Increased borrowing costs, caused in part by the Middle East conflict and associated spike in oil prices, are estimated to have significantly reduced the £23.6bn fiscal headroom recorded in Office for Budget Responsibility's (OBR) ahead of this year's Spring Forecast, according to KMPG's latest economic outlook. The report, co-authored by UK chief economist Yael Selfin and economist Moustafa Ali, suggested the conflict alone had lowered the headroom by around £9bn, while weak growth and a "likely" downgrade to the OBR's migration forecasts could knock a further £2bn off the buffer, leavi...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Economics / Markets

Fahad Hassan: When good news becomes an inflation problem

Fahad Hassan: When good news becomes an inflation problem

'Markets have been adjusting to the risks through valuations all year'

Fahad Hassan
clock 29 September 2026 • 6 min read
Healey promises 'new age of industrialisation' ahead of Budget

Healey promises 'new age of industrialisation' ahead of Budget

Keeps quiet on personal taxation, pensions or savings at Labour’s conference

Isabel Baxter
clock 28 September 2026 • 2 min read
MPs warn policymakers to stop using OBR as scapegoat for tough fiscal decisions

MPs warn policymakers to stop using OBR as scapegoat for tough fiscal decisions

Treasury Committee report

Jack Roach
clock 23 September 2026 • 2 min read