"The autumn budget saw the Government build a healthier degree of fiscal headroom, although some of the more substantial measures won't take effect for a couple years. In the meantime, further tax rises may not be expected in 2026, but previously-announced measures will begin to raise revenues while the Government will need to reduce borrowing and keep public spending steady in order to meet its fiscal rules."
"Easing inflation and falling interest rates should improve consumer sentiment, but this will be countered by slowing pay growth and rising unemployment levels. Nonetheless, the current confidence gap between high and low earners is unusually wide and, as households on greater pay start to feel more upbeat, we can expect slowing real income to be cushioned by a reduced focus on saving. This should support continued consumer spending growth this year and next, albeit at a modest level."
Tax hikes and spending cuts will slow UK economic growth, driving GDP down to 0.9% in 2026. Business investment is forecast to contract by 0.2%, reversing earlier expectations of 0.8% growth. The autumn budget increases fiscal headroom but many measures will take years to take effect. Previously-announced revenue measures will raise receipts while the Government reduces borrowing and holds public spending steady to meet fiscal rules. Global uncertainty and tighter fiscal policy will weigh on growth. Easing inflation and lower interest rates may lift sentiment, but slowing pay growth and rising unemployment will limit consumer spending gains.
Read at London Business News | Londonlovesbusiness.com
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