UK Autumn Budget 2026: what the fiscal package means for inflation
The Chancellor's October 2026 Budget raised public spending by £28bn per year and increased employer National Insurance contributions by 1.5 percentage points. The OBR projects the package will add 0.3–0.5 percentage points to CPI in 2027 — a modest but non-trivial upside risk for the Bank of England.
Frequently asked questions
Does the OBR forecast the impact of the budget on CPI?
Yes. The OBR publishes an "Economic and Fiscal Outlook" at every budget with detailed macroeconomic forecasts, including CPI. The October 2026 EFO projected CPI 0.3–0.5pp higher in 2027 than pre-budget, primarily due to employer NIC pass-through and higher public sector demand. The OBR's CPI forecast is available on the OBR website. Note that the OBR's central forecasts represent the midpoint of a wide distribution — the ±1.5pp fan chart around CPI is wider than the budget's estimated impact.
Why did the October 2026 budget not cause a gilt crisis like the 2022 mini-budget?
Three differences: (1) The 2026 budget was fully costed — tax rises offset spending increases. The 2022 mini-budget was unfunded, promising ~£45bn of tax cuts with no spending offset. (2) The 2026 budget had OBR endorsement and full macroeconomic forecasts; the 2022 mini-budget bypassed the OBR. (3) The macro context was different: in September 2022 the BoE was already mid-hike cycle in a high-inflation environment; in October 2026 inflation was falling and the UK credit spread was tighter. The gilt market response confirmed this — orderly in 2026, disorderly in 2022.
Sources
- 01 OBR — Economic and Fiscal Outlook October 2026 Oct 2026
- 02 Bank of England — November 2026 MPR Nov 2026
- 03 HM Treasury — Autumn Budget 2026 Oct 2026
This story reports official statistics as published. It is reference information, not financial advice or a forecast.