Economic experts assess the impact of the 2026 Autumn Budget

Chancellor John Healey delivered his first Budget on Wednesday 28 October, setting out measures to address the economic challenges facing the UK, including rising living costs and pressure on household finances.

We asked economic experts at the University of Derby to break down the key announcements and explain what they could mean for households, businesses, and the wider UK economy.

Dr Fahad Kazmi: energy costs, inflation and household finances

Dr Fahad Kazmi, Lecturer in Economics at the University of Derby, said the Budget focused on easing the cost-of-living pressures associated with energy price shocks resulting from the conflict in the Middle East.

He said:

“Chancellor John Healey's budget largely set out to mitigate the inflationary pressures caused by the energy price shocks as a result of the military conflict in the Middle East by introducing cost-of-living relief reforms, tax adjustments and structural reforms to energy consumption.

“While the fiscal headroom is expected to drop to £15bn (from £24bn) for 2029-2030 due to higher borrowing costs, financial markets took the news to the budget in their stride with minimal volatility exhibited - as evidenced by a marginal weakening of the pound sterling to the US dollar and yields falling very slightly. This was primarily due to investors welcoming the Chancellor's decision to offer stability through the budget and avoid any major economic shocks.

“On the cost-of-living and energy front, the Chancellor has pledged to offer relief in the form of household energy bill payments and VAT relief, to name a few. These are welcome moves in the short term, but what remains of the most critical importance is bringing UK energy prices down on par with Europe, something that has been pledged through the cost-control spending review framework that the government plans to initiate in 2027 for the next 10 years. Given that energy is the primary channel through which inflationary pressures creep into the economy, this reform needs to be acted upon more quickly, in my opinion.”

“On the ISA front, the Chancellor has announced that the annual tax-free ISA allowance is to remain frozen at £20,000 (as opposed to being cut to £12,000). This is a welcome move that should incentivise savers to keep their money in their respective ISA accounts, thereby boosting credit availability for high street banks via stronger deposit bases. This could also put downward pressure on escalating mortgage rates (which have been climbing due to the energy price shock in the Middle East, which has led to higher interest rates).”

Professor Mark Gilman – impact on small businesses

Professor Mark Gilman, Professor of Economics at the University of Derby, specialises in SME performance and growth. He said, while the budget included some welcome measures for small businesses, more was needed to give them the confidence to invest and expand.

He said:

“There were some welcome measures announced for small businesses, but much of what they need to grow has not been delivered. Businesses want the confidence to plan, invest and innovate, and having a stable tax framework may be valuable in itself. The Budget needs to provide greater confidence for businesses to invest and grow, particularly when they are facing continued uncertainty over costs, taxation and regulation.

“SMEs face yet another rise in the cost of employing people, with nothing announced in this Budget to help them carry it out. Increases to the National Living Wage can be disproportionately difficult for the smallest businesses in the UK. Smaller employers are less likely to feel able to pass additional costs on to customers, have cash reserves to absorb them, or negotiate better prices with suppliers through economies of scale. However, businesses that see this as an opportunity to become more efficient and productive will see long-term benefit.”

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