EY UK Pre-Budget Fiscal Outlook - October 2026 (PDF)

PDF Report: Explore how economic pressures are shaping UK fiscal headroom, public finances and tax policy ahead of the Autumn Budget 2026. 

In brief:

• UK fiscal headroom has halved from £23.6bn in March to £11.3bn, narrowing the Chancellor's options ahead of the Autumn Budget 2026.
• Rising gilt yields are the biggest drag, cutting headroom by an estimated £10bn.
• In EY’s adverse scenario, the Middle East conflict keeps the Strait of Hormuz closed into 2027, cutting headroom by a further £18bn to a £7bn deficit and breaching the fiscal rule.
• Manifesto commitments protect around 70% of tax revenues, leaving wealth-based taxes, capital gains and sector-specific levies among the few viable options for raising revenue.
• Stronger growth would ease pressure and is the key swing factor for the public finances. 

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