Autumn Budget 2026 - pre-budget commentary

Commenting ahead of the Autumn Budget this week, Chris Arcari, Head of Capital Markets, Hymans Robertson says:

“We expect a relatively low-key Budget. Higher gilt yields and a weaker economic backdrop since the spring have eroded the Chancellor’s headroom set by the fiscal rules, from around £24bn to somewhere in the region of £10–15bn. This leaves limited room for manoeuvre. 

“Some reduction in headroom may be acceptable to markets, particularly to tackle temporary adverse events – for example, the energy-price shock. However, large unfunded spending commitments, or fiscal-rule changes simply to accommodate additional borrowing, are likely to be received badly. So far, the government has committed to the existing fiscal rules.

“Gilt yields look high relative to the UK’s longer-term nominal growth potential. But a more meaningful fiscal consolidation, which could materially lower yields, is unlikely while the government sticks to its manifesto constraints on the major taxes. These commitments significantly restrict the available tax base, while social care and other spending priorities are persistent sources of pressure. 

“Therefore, the government would require a fresh electoral mandate before fundamentally reforming the UK tax system. In the meantime, changes to the triple lock or capital gains tax are unlikely, individually, to transform the fiscal arithmetic.”

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