Written Statement: Welsh Government response to the UK Autumn Budget 2026

Today, the Chancellor of the Exchequer, John Healey, presented the UK Autumn Budget, including the Office for Budget Responsibility’s (OBR) new forecast for the UK economy and public finances which took account of the conflict in the Middle East for the first time. 

Global economic conditions remain challenging, with higher energy costs, supply chain pressures, climate-related risks and wider international uncertainty continuing to weigh on growth prospects in Wales and across the world. These external influences have compounded pressures on already strained public finances. The OBR is expecting Gross Domestic Product (GDP) to increase by just 1.2% this year and 1.0% next year. 

The Welsh Government will receive an additional £448m of funding over the current spending review period. This is summarised in Table 1 below. It does not take into account changes as a result of employer pension contribution savings. 

Table 1: Changes to the Welsh Government Settlement

*Numbers might not add up due to rounding

Whilst the Chancellor stated his intentions to shift power and funding out of Westminster, that was not extended to Wales. The additional resource funding announced today does not reverse the real terms cut in our funding. Our resource funding will be 0.5% lower in real terms next financial year. 

The capital funding position also remains a significant concern. The Welsh Government's capital budget reduces in real terms in each of the remaining years of the Spending Review period. As a result, our capital funding will be almost 10% lower in real terms by 2029-30. This significantly limits our ability to invest in economic growth measures and the public infrastructure that communities and businesses rely on.

The Welsh Government’s ability to manage this difficult budget position is compounded by the constraints imposed by the UK Government on borrowing and access to the Wales Reserve in future years. Despite repeated calls from the Welsh Government and support from the Senedd for greater fiscal flexibility, the UK Government has retained unnecessarily tight restrictions. 

The cost-of-living measures announced by the Chancellor in the Budget will help ease some of the pressures facing households across Wales including energy costs. The Welsh Government’s Cabinet has been discussing how we can best support households through this difficult period. Now that the UK Government has responded positively to the Welsh Government’s calls to provide funding to make this possible, I am pleased to confirm that we will be making a £100 cost-of-living payment to all households in council tax bands A to D.

However, the UK Government could have taken further steps to target support to those who need it most. It is disappointing the UK Government chose not to unfreeze Local Housing Allowance rates which would have helped some of the most vulnerable households in Wales avoid homelessness. 

The UK Government needed to bring forward significantly more of its £14 billion commitment to invest in UK Government controlled Welsh rail infrastructure than the £302m currently allocated during this spending review period. The UK Government is failing to reverse decades of underinvestment in Welsh railways and realise the economic and connectivity benefits throughout Wales.

This was not a UK Government Budget that delivered for Wales. We will now consider the implications arising as we finalise our decisions ahead of publication of the Welsh Budget on 17 November 2026. 

The Welsh Government's priority remains building a Wales that can grow its economy, strengthen public services, improve everyday life, and shape its own future. Continued pressures on day-to-day spending and a declining capital settlement will make it harder to invest in public services, infrastructure and economic growth. Despite these pressures, the Welsh Government will continue to stand up for Wales and make the case for the fair funding and investment communities need.