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Outlook for Fiscal Policy

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  • National Institute of Economic and Social Research

Abstract

The Chancellor delivered her second Budget in November 2025, following months of speculation about the public finances. She chose to raise taxes to support higher spending and to rebuild fiscal headroom. Taxes are now set to rise by £26 billion a year by the end of the decade, according to the OBR. Furthermore, budget spending measures raise borrowing in every year, and by £11 billion in 2029/30. This includes policy measures such as the removal of the two-child benefit cap, at the cost of approximately £3 billion per year. (Read further in publication).

Suggested Citation

  • National Institute of Economic and Social Research, 2026. "Outlook for Fiscal Policy," National Institute Economic Outlook, National Institute of Economic and Social Research, issue Winter, pages 33-35.
    • Handle: RePEc:nsr:niesre:i:winteryy:2026p:33-35
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    File URL: https://niesr.ac.uk/wp-content/uploads/2026/02/UK-Economic-Outlook-Winter-2026.pdf?ver=EyxXRRh0JbNxFNGn7b3d
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