IMF raised its 2026 UK growth forecast to 1.3% from 1%, and trimmed 2027 to 1.2% from 1.3%. Its 2027 inflation forecast moved further, to 2.8% from 2.4%, and the IFS says inflation will erode departmental budgets before the 28 October Budget.
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IMF raises its 2026 UK growth forecast to 1.3%, up 0.3 points from July, a little over a fortnight before Healey's first budget. It told him to stay the course on the deficit, but its warning on energy subsidies was addressed to every member government, so the budget's contents are still open.
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Chancellor John Healey has internally ruled out aligning capital gains tax with income tax before the 28 October Budget, the Financial Times reported. The Treasury has not confirmed it, so sellers can treat full alignment as unlikely this quarter while waiting for the Budget statement itself.
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The IFS says inflation could force Chancellor John Healey to add up to £35bn to departmental budgets by decade-end, a bigger problem than borrowing costs. Headroom for 2029-30 slips only to about £20bn from £24bn, so the harder Budget call is on departmental spending.
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- Investor 53%
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IMF's Global Financial Stability Report warns that an AI correction could be global, citing sky-high valuations and rising debt at AI companies. Asia is rated most exposed after the US; the UK and euro area are potentially more insulated.
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Chancellor John Healey may need an extra £25bn in 2029-30 to hold departmental budgets against war-driven inflation, by the IFS's estimate. He is not obliged to set spending totals in his 28 October Budget, so the choice between cuts and tax rises could wait until next year.
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Ministers are weighing a new select committee, an audit body and even recall for England's mayors as more income tax revenue heads their way. For combined authorities, the scrutiny attached to that money now matters as much as the size of the tax share.
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Prime Minister Andy Burnham is loosening the state pension triple lock as 10-year gilt yields sit above 5%, with savings of 15 billion pounds a year by 2040. None of that money reaches borrowing before the next election, so gilt holders are being handed a promise about spending in the 2040s.
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