Barclays Research economists and strategists contributed three chapters to this year’s Green Budget, providing analysis of the UK economic outlook, the fiscal implications of quantitative easing and tightening, and the changing dynamics of the gilt market.

In Economic Outlook: Headwinds on the Horizon, Jack Meaning, Barclays Chief UK Economist, and Cian Hennigan, Barclays UK Economist, examine how the conflict in the Middle East has disrupted expectations of a soft landing for the UK economy. Higher energy prices are likely to keep inflation above target through 2027, putting pressure on household incomes and slowing economic growth. Meaning and Hennigan’s analysis forecasts GDP growth of 1.4% in 2026 and 1.2% in 2027*, while exploring how investment in technology and AI could help deliver longer-term productivity gains.

Meaning and Hennigan’s second chapter, The Direct Fiscal Effects of Quantitative Easing and Tightening, examines the cost to the Treasury of unwinding the Bank of England’s bond-buying programme. With payments from HM Treasury to cover Asset Purchase Facility losses estimated at around £19 billion in 2026–27**, the chapter considers how changing interest rates and gilt yields affect the public finances, and whether alternative arrangements could help manage these costs.

In Chancellor Healey Meets the Bond Market: Let Sleeping Dogs Lie, Moyeen Islam, Head of UK Rates Strategy at Barclays, considers the implications of rising gilt yields for the Chancellor’s fiscal plans. While UK borrowing costs are near multi-decade highs, the recent increase has broadly mirrored movements in other major economies rather than reflecting a deterioration in sentiment towards UK government debt specifically. Islam’s analysis explores why maintaining fiscal credibility and avoiding surprises in the Budget will be critical to keeping investors’ attention elsewhere.

Together, the three chapters examine the interconnected pressures shaping the UK’s economic and fiscal outlook, and the choices facing policymakers as they seek to balance growth, stability and market confidence.

Read the full IFS Green Budget 2026

Listen to the Barclays Brief podcast UK Budget: What Markets May Be Missing