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KPMG Warns Iran War Shrinks Chancellor’s £12B Headroom

By Drooid · Sep 21, 2026, 9:58 AM UTC · How we work

Summary

Healey Faces Budget Cuts

Chancellor John Healey faces a budget with roughly £12 billion fiscal headroom, down from £23.6 billion.
KPMG reports Iran-war borrowing costs have already reduced headroom by about £9 billion.
KPMG adds expected OBR downgrades could shave another £2 billion from headroom.
KPMG says the Chancellor has limited scope for growth support and may need tax rises or spending cuts.

Summary

Burnham Promises Devolution

Burnham promised a road map to fiscal devolution at the autumn Budget.
Shevaun Haviland, director general of the British Chambers of Commerce, urged that devolution put businesses at the centre of growth.
The British Chambers of Commerce survey of 5,000 firms found only 17% plan to increase investment in Q2 2026.
The business group called for completing devolution by the end of the 2027-28 fiscal year.

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Healey Faces Budget Cuts

Chancellor John Healey faces a budget with roughly £12 billion fiscal headroom, down from £23.6 billion.
KPMG reports Iran-war borrowing costs have already reduced headroom by about £9 billion.
KPMG adds expected OBR downgrades could shave another £2 billion from headroom.
KPMG says the Chancellor has limited scope for growth support and may need tax rises or spending cuts.

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