The UK Government faces a difficult economic backdrop to its autumn Budget on 28 October as figures reveal the economy is nearly stagnating. Business activity data shows the weakest performance in three months, whilst the OECD has downgraded growth forecasts and the IMF has warned about rising debt levels across major economies. Chancellor John Healey is under mounting pressure to find funding for Government commitments, with speculation intensifying that tax rises may be necessary.

Economic growth indicators have weakened considerably, with the closely watched PMI index falling to 51.7 in September from 52.5 in August—equivalent to quarterly GDP growth of just 0.1 per cent. The OECD now forecasts UK growth of only 1 per cent in 2027, down from 1.1 per cent previously, well short of the Government's manifesto pledge for the strongest G7 growth. Input price inflation has risen for a second consecutive month to its highest level since June, driven by soaring energy and fuel costs linked to geopolitical tensions in the Middle East. Meanwhile, Prime Minister Andy Burnham has stated he will not soften his policy agenda despite the constrained fiscal environment.