Autumn Budget 2026: Future Money Response

This article is by Justin Rourke – Head of Advice at Armstrong Watson Financial Planning & Wealth Management and Richard Cole, CEO of Future Money. Here we provide you with our commentary on the latest economic and investment developments which are likely to be affecting your investment and pension portfolios.

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Today’s Budget was a low-key event for investment markets, and John Healey is likely delighted with this. The pound is unmoved, the FTSE is flat and gilts are roughly where they started the day.

With the UK’s debt-to-GDP ratio near 100%, the cost of servicing this debt is one of the most challenging issues facing the country. Over recent months, borrowing costs have increased around the world, given higher inflation expectations and concerns over growing fiscal deficits, as countries continue to spend more than they raise through tax.

Against this global backdrop, the UK market has still come under pressure but performed relatively well. The UK government’s focus on fiscal responsibility has been appreciated, including by the IMF.

The Chancellor’s challenge with this Budget, therefore, was to not rock the boat. While Andy Burnham would like to increase spending to fulfil his traditional Labour instincts for a more supportive state, his previous desire that we should move beyond being “in hock to the bond markets” appears to have been suppressed. Had the bond markets turned on this government, as they did on Liz Truss’s government in 2022, then his ability to fulfil his plans would have been scuppered by higher interest rates.

This was a small Budget by recent standards. Healey was able to use some of the headroom previously built up by Rachel Reeves to offset the blow from higher energy prices and borrowing costs, with the £100 energy rebate for council tax bands A to D targeting the former. This will cost £2.6bn, which is a significant giveaway, but not one large enough to test investors’ nerves.

The bank tax surcharge was an announcement that had been expected in some form, but with the levy raised by just 3%, this was below expectations and helped avoid a negative shock to the equity market.

Beyond that, there were few measures likely to trouble markets, allowing investors to focus on other global matters. But while the Chancellor will want this to be seen as a Budget built on fiscal discipline, attention will soon turn to what comes next. With the government’s Spending Review due next year and a large increase in defence spending reaffirmed today, questions over how this will be funded, and the sustainability of the nation’s finances, will not disappear. Bond investors will continue to watch closely.

Important Information

Please note that the contents are based on the author’s opinion and are not intended as investment advice. Past performance is not a reliable indicator of future performance. The value of investments and the income derived from them can fall as well as rise, and investors may get back less than they invested.

If you would like to discuss your investment portfolio please speak with one of our Financial Planning Consultants on 0808 144 5575 or email us.