Rising bond yields and inflation driven by the war in the Middle East have increased borrowing costs and reduced the purchasing power of government agencies. IFS Director Helen Miller stated that a steady-as-she-goes budget is not a viable option, as debt interest now consumes £1 of every £13 of total expenditure. The institute also noted that fiscal headroom for 2029-30 has likely dropped to £20 billion, down from the £24 billion forecast in March.
Tuesday, October 20, 2026
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IFS Warns UK Needs £35B in Tax Hikes to Avoid Public Service Cuts
Global Markets9 days ago
Chancellor John Healey faces a budget shortfall that may necessitate higher taxes or reduced welfare payments to fund current spending priorities, the Institute for Fiscal Studies said Sunday. The think tank estimated that approximately £35 billion in revenue or savings is required to protect departmental budgets and raise defense spending to 3% of GDP by 2030. This gap includes £25 billion needed to prevent service cuts by 2030-31 and £11 billion for the military.
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