FXStreet reported that Nomura expects the UK’s fiscal headroom to narrow to about £15 billion at Chancellor John Healey’s Oct. 28 Budget, a forecast that has not been confirmed in official budget figures.
FXStreet also reported Nomura expects the 2026–27 financing requirement to exceed the existing plan by £4 billion. Nomura attributed the extra need to slower inflows from National Savings and Investments and winter cost-of-living support, and forecast £2 billion in additional gilt sales and £2 billion in Treasury bills.
The Debt Management Office’s April remit set the 2026–27 net financing requirement at £251.2 billion: £246.2 billion from gilt sales and a £5 billion net contribution from Treasury bills. The remit is the government’s published financing plan for the year.
September 2026 data from the Office for National Statistics (ONS) showed public sector net borrowing of £24.5 billion, £1.9 billion above the Office for Budget Responsibility (OBR) forecast. Borrowing for the financial year through September reached £97.8 billion, £6 billion above forecast. By contrast, the central government net cash requirement, a measure of cash needed to finance government activity, was £16.9 billion, £7.3 billion below forecast.
The OBR’s March 2026 forecast put the buffer against the stability rule at £23.6 billion for 2029–30. The rule tests whether projected revenue covers routine government spending; the headroom is the margin before the forecast would fail that test. The Institute for Fiscal Studies (IFS) has outlined a plausible scenario with about £20 billion of headroom, while warning that shifts in expected earnings growth could change its estimate by roughly £10 billion in either direction.
The IFS also warned that inflation could erode the value of departmental budgets and put public services under pressure. In its assessment, restoring that spending power while paying for higher defence spending could mean tax increases or benefit cuts. Labour’s 2024 manifesto pledged not to raise National Insurance, the basic, higher or additional rates of Income Tax, or VAT.
The Budget is scheduled for Oct. 28, and the ONS plans to publish its next public-finance figures on Nov. 20.
