Budget 2026: the numbers waiting for Chancellor John Healey on Wednesday

Borrowing is running £6 billion above forecast, gilt yields hit their highest since 2007 this month and inflation has climbed to 3.5%. Here is the official record John Healey takes into his first Budget, and where Kent sits in it.

Chancellor John Healey will deliver his first Budget on Wednesday 28 October 2026, the first under Prime Minister Andy Burnham, who took office on 20 July. The Office for Budget Responsibility will publish its Economic and fiscal outlook the same afternoon, after Healey’s statement, with OBR chair Jonathan Haskel presenting its key messages. The OBR was commissioned on 31 July to produce the forecast.

The central tension heading into Wednesday is the gap between the position the OBR set out in March and the official data published since. In March the OBR forecast a £24 billion surplus on the day-to-day budget in 2029-30, the margin against the government’s main fiscal rule. Since then, borrowing has run £6.0 billion above that forecast and gilt yields have reached their highest level since 2007. What the Budget will contain is not known until Healey rises in the Commons on Wednesday.

Kent Local News will report the Budget as it is delivered on Wednesday and follow up with what it means for Kent households.

Where the forecasts stood in March

The OBR’s March 2026 forecast set out a broadly improving picture over the parliament. It projected GDP growth slowing from 1.4% in 2025 to 1.1% in 2026, then averaging 1.6% a year from 2027 to 2030. CPI inflation was forecast to fall from 3.4% in 2025 to 2.3% in 2026. Unemployment was expected to rise to about 5.3% before falling back. Borrowing was forecast at 4.3% of GDP, or £133 billion, in 2025-26, declining to 1.6% of GDP by 2030-31. Public sector net debt was projected to peak at 96.5% of GDP in 2028-29.

The government’s main fiscal rule requires day-to-day spending to be covered by tax receipts by 2029-30. The OBR’s March forecast showed a current budget surplus of £24 billion, equal to 0.7% of GDP, in that year. That £24 billion is the margin against the rule.

What has changed since

On growth, the economy has performed ahead of the 1.1% annual pace the OBR forecast for 2026. GDP grew 0.6% in the first quarter of 2026 and 0.5% in the second quarter, according to ONS quarterly national accounts published on 29 September. Monthly GDP grew a further 0.1% in August.

Inflation has moved in the opposite direction from the forecast. The OBR expected CPI to fall to 2.3% for the year; it stood at 3.5% in the 12 months to September 2026, up from 3.1% in August. Transport, particularly motor fuels, made the largest upward contribution. Core CPI was 2.8% and services inflation 3.7%. Inflation has risen since the conflict in Iran, which began in late February 2026, pushed up oil and energy prices.

The labour market has also been stronger than the March forecast implied. The unemployment rate was 4.7% in June to August 2026, down from 4.9% in the previous three months, against the OBR’s forecast of a rise to about 5.3%. Vacancies recorded their largest fall since the start of the year. Regular pay grew 3.7% a year in June to August; after inflation, total pay grew 0.7%.

Borrowing and the cost of debt

The government borrowed £24.5 billion in September, £1.8 billion more than in September 2025 and £1.9 billion above the OBR’s forecast for the month. Borrowing in the financial year to September was £97.8 billion, £4.4 billion less than a year earlier but £6.0 billion above the OBR’s March forecast. Borrowing in the full year to March 2026 was £134.2 billion, 4.4% of GDP.

Public sector net debt passed £3 trillion for the first time, reaching £3,005.0 billion at the end of September 2026, equivalent to 94.0% of GDP. As a share of GDP it was lower than a year earlier. Central government debt interest was £10.9 billion in September alone and £60.8 billion in the financial year to September.

When gilt yields rise, new and refinanced government borrowing costs more, which increases the interest bill and can reduce the margin against the fiscal rules. The Bank of England’s 10-year gilt yield was 4.48% on 3 March, the day of the spring forecast. It reached 5.43% on 8 October 2026, the highest since July 2007, and stood at 5.32% on 23 October. Bank Rate has been 3.75% since 18 December 2025. In September the Monetary Policy Committee voted 6-3 to hold it, with three members voting to raise it to 4%. The next decision is on 5 November.

What is already decided

The income tax personal allowance of £12,570 and the basic rate limit of £37,700 are frozen until 5 April 2031, under a decision announced in the November 2025 Budget. The thresholds have been frozen since April 2021. As pay rises, more income is pulled into higher tax bands without any change in rates, a process known as fiscal drag. The higher-rate threshold stands at £50,270.

Fuel duty is 52.95p a litre. The November 2025 Budget set out a staged reversal of the 5p cut, starting with 1p from 1 September 2026. On 20 May 2026 the then Prime Minister, Keir Starmer, told the Commons the 52.95p rate would stay until the end of the year, postponing the September rise. The government has not said what happens after that.

What the government has said will be in the Budget

Two measures have been officially pre-announced. On 26 September 2026 the government said a new equity-loan scheme for first-time buyers in England, called Your First Home, would be confirmed at the Budget. Buyers would put down an expected 2.5% deposit, with a government-backed equity loan covering 20% of the price and an initial interest-free period. The scheme applies only to new-build homes from developers that sign up; household income caps and local price caps are still to be set. Costs and timelines are due at the Budget.

On 22 October the Treasury and No 10 said the Chancellor will use the Budget to set out a roadmap for fiscal devolution, letting regional leaders decide how a share of some national taxes is spent, and further changes to the Treasury’s Green Book rules for assessing projects. Prime Minister Andy Burnham said: “Communities have been let down for years by outdated rules” and “That’s why we’re changing the system so that local priorities are put at the heart of decision making.” Chancellor Healey said the government wants to “transfer more power and resources out of Westminster and into postcodes across the country.” Kent and the South East were not named in the announcement.

These are the only measures the government has officially pre-announced for Wednesday’s Budget.

Where Kent stands

In September 2026, 33,605 people in the Kent County Council area were claiming unemployment-related benefits, equal to 3.4% of residents aged 16 to 64, up from 31,855 (3.2%) a year earlier. The South East rate was 3.1% and the UK rate 3.9%. In Medway, 7,775 people were claiming, a rate of 4.2%.

Kent County Council’s finances are under pressure ahead of Wednesday. Its first-quarter monitoring for 2026-27 forecast an £21.4 million overspend, 1.3% of its £1,655.6 million working budget, driven mainly by looked-after children’s placements (£19.8 million over budget) and adult social care (£9.1 million over). The same papers forecast a £109 million in-year overspend on high-needs funding for special educational needs. The Budget sets the overall envelope for local government; council funding for 2027-28 is normally set in the local government finance settlement, which usually follows in December.

On housing, the average Kent home sold for £345,200 in August 2026, down 0.5% on a year earlier. The average first-time buyer in Kent paid £283,559. The Your First Home scheme announced for Wednesday is restricted to new-build properties from participating developers, and the income and local price caps that will determine eligibility have not yet been set.

What to watch on Wednesday

Whether the OBR finds the government’s fiscal rules are met, and by what margin, given that borrowing has run £6.0 billion above the March forecast and gilt yields have risen sharply since then.
What, if anything, the Chancellor announces on income tax thresholds, given that the freeze to 2031 is already in place and pay growth of 3.7% continues to pull more income into higher bands.
Whether the Budget sets out what happens to fuel duty after the end of 2026, when the government’s postponement of the staged reversal expires.
The full details of the Your First Home equity-loan scheme, including the household income caps, local price caps and the timeline for opening to buyers.
Whether the fiscal devolution roadmap sets out any specific arrangements or timelines for areas such as Kent and the South East.
How gilt markets respond to the OBR’s updated forecasts and any new spending or tax decisions, given that the 10-year yield already stands at its highest level since 2007.

Key figures

£6.0 billion: borrowing above the OBR’s March forecast in the financial year to September 2026 (ONS, 21 October 2026)
3.5%: CPI inflation in the 12 months to September 2026, against an OBR forecast of 2.3% for the year (ONS, 21 October 2026)
5.43%: 10-year gilt yield on 8 October 2026, the highest since July 2007 (Bank of England, 8 October 2026)
£24 billion: the OBR’s March 2026 margin against the current budget rule in 2029-30 (OBR, March 2026)
£3,005.0 billion: public sector net debt at end of September 2026, 94.0% of GDP (ONS, 21 October 2026)
4.7%: UK unemployment rate, June to August 2026, against an OBR forecast of a rise to about 5.3% (ONS, October 2026)
3.4%: claimant count rate in Kent in September 2026, up from 3.2% a year earlier (Nomis, September 2026)
£109 million: forecast in-year overspend on high-needs funding in Kent (KCC Scrutiny Committee, 21 October 2026)
£283,559: average price paid by a first-time buyer in Kent, August 2026 (HM Land Registry, August 2026)

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Budget 2026: the numbers waiting for Chancellor John Healey on Wednesday Quiz

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Sources

Source article: ONS, Public sector finances, UK: September 2026

Image: AI-generated illustration by Kent Local News (Aegis Lumina)

Published: 27 October 2026

Forecasts are the Office for Budget Responsibility’s March 2026 figures; outturn data are taken from the ONS, the Bank of England, HM Land Registry and Kent County Council’s own committee papers. Quotes from the Prime Minister and the Chancellor are as published by GOV.UK. This article describes the position before the Budget and does not predict its contents. If you believe anything here is inaccurate, contact editor@kentlocalnews.co.uk — see our corrections policy.