IFS Zooms In: The Economy The Autumn Budget explained
Nov 27, 2025
Ben Zaranko and Christine Farquharson, both esteemed economists from the IFS, delve into the surprises of the recent Autumn Budget. They discuss why the anticipated fiscal repair didn’t materialize, spotlighting a fortunate rise in tax receipts. Christine highlights significant reforms, such as abolishing the two-child limit and increasing funding for special educational needs. They also explore new policies, including a mansion surcharge and the impacts of a fuel duty freeze, ultimately questioning the budget’s long-term growth strategy.
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Confront Rising Service Pressures In 2027
- Prepare to confront SEND and asylum pressures at the 2027 spending review rather than delaying hard choices.
- Consider reforms, reallocation, tax rises or borrowing to manage those persistent pressures.
Two-Child Limit Removal Lowers Child Poverty
- Removing the two-child limit costs about £3 billion and is a highly cost-effective way to reduce relative child poverty for 450,000 children.
- Evidence on long-term outcomes for children is mixed, so welfare impact beyond poverty rates is uncertain.
Short-Term Borrowing For Immediate Welfare
- The Chancellor chose to borrow in the short run to fund immediate welfare increases while phasing tax rises into later years.
- That mix gives short-term giveaways but risks repeated borrowing if future tax rises are delayed.