UK Budget 2026: Chancellor faces pressure to find new revenue

As the October Budget approaches, the UK government faces significant pressure to find new revenue streams while adhering to manifesto commitments. Prime Minister Andy Burnham has reiterated that the administration does not intend to increase income tax, VAT, or employee National Insurance.

Chancellor John Healey must balance these commitments against substantial spending requirements in defense and welfare, alongside rising borrowing costs. Economists suggest that tax rises may be unavoidable to meet fiscal rules and address the country's difficult financial position.

One potential target for increased revenue is the banking sector. Major banks, including Barclays, HSBC, Lloyds, and NatWest, reported significant profits in 2025 and 2026. Analysts suggest the Chancellor could increase the existing 3% banking surcharge on profits exceeding £100 million rather than introducing entirely new taxes.