Fuel and travel costs are pushing prices up again
Thursday 5 November 2026
Inflation has risen to 3.1%, meaning everyday spending is getting more expensive just as household budgets are already under pressure.
Automatic stabilisers
Parts of the tax and benefit system that respond to a weaker or stronger economy without a new policy decision.
What it means
When people lose work or earn less, they generally pay less in income taxes, while some may qualify for more support under existing benefit rules. That leaves more money with affected households than if taxes and support did not respond at all. When the economy strengthens, tax receipts can rise and some benefit spending can fall. These changes happen automatically under the rules already in place; they do not require a new tax rate or a new benefit to be announced.
Example
If a group of workers loses income in a downturn, the income tax collected from them can fall automatically. Some may become eligible for help under existing rules, even if Parliament makes no new tax or benefit changes.
Why it matters
A deficit may widen during a downturn partly because existing systems respond to hardship, rather than only because the government has announced new spending.
Also known as
automatic fiscal stabilisers
Related terms
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Budget deficit
The gap when the government and wider public sector spend more than they receive over a period.
Read more -
Fiscal policy
Government decisions about taxes, spending and borrowing.
Read more -
Progressive tax
A tax under which people with more income pay a larger share of it in tax.
Read more -
Unemployment rate
The share of people in the labour force who have no job, are looking for one and are available to start.
Read more
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Clear, accessible analysis of the economic issues shaping everyday life
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