Chancellor of the Exchequer John Healey has reduced the Treasury’s fiscal headroom to £15bn during 2029-30, from £23.6bn during March’s forecast, according to figures from the Office for Budget Responsibility (OBR).
Addressing the House of Commons during his Autumn Budget speech today (28 October 2026), the chancellor attributed this to conflict in the Middle East pushing up government borrowing across the G7.
The OBR’s headroom against the stability rule will rise to £22bn in 2030-31.
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Defending the reduction in fiscal headroom, Healey said: “We are using some headroom from last year to absorb the impact of the Iran war to protect the family budget.
“That is what a buffer is for. Use it when you need it, rebuild it when you can.”
Debt-to-GDP is due to come in at 83.2% for this year, according to OBR forecasts, which is expected to rise to 83.8% during 2028-29. It is then expected to fall again to 83.1% in 2030, 82.3% in 2031 and 81.7% in 2032.
Government borrowing has fallen from 5.1% to 4.4% so far this year, according to Healey, and is forecast to fall to 4.2% by the end of 2026. Borrowing is predicted by the OBR to fall to 3.4% next year, 2.9% in 2029, 2.1% in 2029-30 and 1.8% from 2030 to 2032.
