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Healey Budget Cuts Headroom, Slashes 2027 GDP Forecast

By Drooid · Oct 28, 2026 · How we work

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Summary

Chancellor John Healey presented budget to the House of Commons, focusing on short-term cost-of-living relief and postponing spending.
OBR projected £1.7 billion revenue loss this year due to extending the electricity VAT cut.
The budget doubles the bank profit surcharge to 6 % for 15 months, expected to raise about £1.5 billion.
Fiscal headroom fell to £15 billion from £23.6 billion.
OBR now forecasts UK GDP growth of 1 % in 2027, down from 1.5 % in 2026.

History

After the 2008 recession, David Cameron branded 2009 the “age of austerity.” When the Conservative-Liberal Democrat coalition took power in May 2010, Chancellor George Osborne delivered the June 22 2010 emergency budget, raising VAT to 20% on 4 January 2011 and imposing a £2 billion bank levy. The plan targeted a £110 billion deficit-reduction through spending cuts and tax hikes.

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After the 2008 recession, David Cameron branded 2009 the “age of austerity.” When the Conservative-Liberal Democrat coalition took power in May 2010, Chancellor George Osborne delivered the June 22 2010 emergency budget, raising VAT to 20% on 4 January 2011 and imposing a £2 billion bank levy. The plan targeted a £110 billion deficit-reduction through spending cuts and tax hikes.

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