budget

Chancellor John Healey is facing a funding gap of up to £35bn and must set out “credible” spending plans in his first Budget on 28 October, an influential think tank has warned.

The Institute for Fiscal Studies (IFS) said that if the government wants to increase defence spending to 3% of national income by 2030 and lift health spending without squeezing other departments, it will need a “top-up” of billions of pounds.

Higher inflation, caused by the Iran war, could eat into what the government hoped to spend on public services, meaning Healey will have to choose between spending cuts, tax rises, or a mixture of both, the IFS warned.

The Treasury declined to comment on “rumour and speculation”.

The IFS urged the government to ensure its spending plans are credible, as opposed to proposing unrealistic future cuts to make the Budget add up.

The government is under growing pressure to show financial markets that it has a tight grip on finances as the cost of borrowing rises.

The IFS cautioned Healey about making any spending announcements in the 28 October Budget speech he has no intention of honouring.

“A ‘steady-as-she-goes’ Budget is not an option available to the chancellor,” said IFS director Helen Miller.

“Choosing to stay the course with the inherited tax and spending plans would mean allowing inflation to blow departments’ spending plans off course.

“Simply pencilling in implicit cuts that he has no intention of delivering would make the Budget a work of fiction,” she added.

Speaking ahead of the annual International Monetary Fund meeting this week, Healey said: “The consequences of conflict in the Middle East and Europe are hitting countries worldwide, leading to higher prices at the pumps and more expensive mortgages at home.

“But Britain and our allies can face up to these challenges together.”

He said his Budget “will build on this approach with fiscal discipline helping to deliver economic resilience” and give people “breathing space”.

Miller told the BBC’s Today programme that Healey has inherited spending plans for government departments where spending growth would slow in the coming years.

“[It] already looked likely that he would have to make spending cuts just to live within those,” she said. “Now, along comes the Middle East war, inflation goes up and those spending plans look very tight indeed.”

Added to that, the chancellor has said he wants to get defence spending up to 3% of national income. Under Keir Starmer’s leadership, Healey resigned as defence secretary in June in a battle with the Treasury over military spending.

Miller said: “You put all that together, if he wanted to do all of that within current spending plans he’s looking at having to cut some other services by something like £35bn.”

The chancellor does not have to address spending totals in this Budget, and may choose to leave such decisions until future events – for example, next year’s Spring Statement or Spending Review – by which time the outlook for the economy could look very different.

But the IFS warned not addressing it would cast doubt on the credibility of the government’s plans.

Previous chancellors have relied on a similar strategy of pencilling in unrealistic future spending plans to ensure that they meet the fiscal rules on the day – only to change the plans further down the line.

Miller said Healey’s focus on fiscal discipline was a “good first start but what he needs to do is not just say he’s going to cut borrowing in coming years but actually deliver on those plans.”

Ryanair gave an update on Friday morning

Budget carrier Ryanair has issued an update, confirming that it cancelled 1,000 flights.

It partly attributed the recent “collapse” of Britain’s air traffic control system for the scrapping more than 1,000 flights in September. The Irish airline said the cancellations stemmed from two separate air traffic control (ATC) failures within a fortnight of one another last month, alongside ATC strikes in Belgium and widespread disruption across Europe caused by volcanic ash clouds from eruptions at Mount Etna.

The head of Britain’s National Air Traffic Services (Nats), Martin Rolfe, has faced mounting calls to quit following a string of air traffic failures that led to thousands of flight cancellations across the industry last month, leaving hundreds of thousands of passengers stranded.

The most recent incident was triggered by a “connectivity issue” at its Prestwick centre in Scotland, which was unrelated to an ATC software fault on September 8 that sparked widespread travel chaos.

Ryanair has been among those demanding Mr Rolfe’s resignation, while Transport Secretary Heidi Alexander has arranged a meeting with Nats chairman Sir Warren East, the former chief executive of Rolls-Royce, in the coming weeks to address the ongoing issues.

Latest Ryanair figures

Ryanair’s most recent traffic statistics revealed the airline operated over 111,700 flights last month, carrying 20.1 million passengers, a rise of 4% year on year. Wizz Air also released passenger data showing a 24% increase year on year in passengers flown last month, reaching 7.78 million, with capacity up 25.3%.

Yet Wizz announced recently it would slash its flight schedule by 5% over the second half of 2026 owing to broader Iran war pressures on the travel sector and spiralling fuel costs.

Following the latest disruption, easyJet said it “calls into question the resilience of Nats’ systems” and Jet2 said customers and airlines need “action, accountability and proper resilience”.

Calls to resign

On September 21, chief operations officer for Ryanair Neal McMahon said: “Martin Rolfe has presided over repeated system failures, repeated passenger disruption and repeated failures to deliver an effective back-up system.

“Enough is enough. Martin Rolfe should resign today.”

Tim Alderslade, chief executive of industry body Airlines UK, said ATC was “critical national infrastructure” which “must be resilient enough to keep people moving”.

He added: “Yet another Nats failure is causing delays and disruption for passengers and airlines alike, and comes just days after its report into the most recent major outage. Passengers and airlines deserve better and the independent CAA (Civil Aviation Authority) report, together with the forthcoming Civil Aviation Bill, must address the underlying weaknesses in the system so that these failures stop happening.”

ONE airline has scrapped two of its routes to New York for the winter season – including one from London.

As a result, there will just be one remaining transatlantic route from the UK.

Norse Atlantic Airways has removed its planned flights to New York from its winter schedule from both London Gatwick and Rome airports.

Data from OAG Schedules Analyser revealed that Norse had planned for 41,600 two-way seats on routes to New York (JFK) from London Gatwick and Rome Fiumicino Airport during the winter 2026-27 season.

Each was scheduled to operate as many as three-weekly flights.

The latest schedules reveal that these routes will continue through the rest of the summer season – but regular service will end from late October.

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On its website, the last date to fly from London Gatwick to or from New York City with Norse is on October 24.

Without these two routes, the only transatlantic service from Norse during the winter is between London Gatwick and Orlando.

Their withdrawal leaves Norse without New York service during the winter and sees London Gatwick-Orlando as its only scheduled transatlantic route during the season.

According to Aviation Weekly, the airline’s planned winter network has been reduced by around 105,500 seats.

The two New York routes account for about 83,200 of the seats removed.

From London, passengers with Norse can still fly to Bangkok, Phuket and Cape Town.

The airline also launched the Thailand service from Manchester Airport in November 2025 with one flight a week.

Due to the huge demand, this will increase to four times a week from December 5, 2026 to April 18, 2027.

Flights will operate on Mondays, Wednesdays, Saturdays and Sundays, and start from £254 one way.

Published on 15/09/2026 – 17:02 GMT+2•Updated
17:53

In a document sent to EU legislators and seen by Euronews, the US has threatened the EU with retaliation if it does not scrap European preference provisions in its multiannual budget.

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EU member states are currently discussing the EU’s long-term budget (2028-2034), which includes a €402 billion fund dedicated to competitiveness that favours the production of key goods within the EU, including in defence.

The measure would potentially exclude foreign firms from EU financing to protect strategic and economic security interests.

“With further expansion of European preference measures in EU defence funds, the United States will review all potential response measures, including a rollback of the existing ‘Buy American’ blanket waivers and exceptions associated with the RDPAs [Reciprocal Defence Procurement Agreements] with 19 of the 27 member states,” the non-paper reads.

The Buy American Act requires the US government, including the US Department of Defence, to give preference to products manufactured in the US for certain public procurements, with some exceptions being granted in defence for some EU countries.

The non-paper adds that the European preference would impede “partnership” and “collaboration” with the US, and calls on the EU to introduce a “made with Europe” system – or, in the specific area of defence, a “made in NATO”.

Trade tensions

The US’s latest warning comes after the creation of the Security Action for Europe programme in 2025, already sparked trade tensions between Washington and Brussels over a European preference for joint purchases of arms and military equipment.

The “made in Europe” approach is also pushed by France and the European Commission in several pieces of legislation over the last year designed to boost EU industry, with foreign countries lobbying hard against being excluded from the EU market.

The US and EU have been at loggerheads over trade since the start of the second Trump administration, amid repeated tariff threats and disputes over environmental and digital regulations which the White House deems to be non-tariff barriers.

The Commission hoped that the conclusion of a trade agreement in July 2025 would be a step towards a more stable transatlantic relationship.