Autumn Budget 2025 – how can we assess its impact on economic wellbeing?
The Chancellor’s second Autumn Budget introduced a raft of measures aimed at balancing investment in public services with addressing the rising cost of living and shoring up public finances.
Headlines have focused on measures affecting personal finances, such as increases to the National Living Wage, freezing of income tax thresholds, lifting the two-child benefit cap, shaving £150 off energy bills and limiting tax-free pension contributions through salary sacrifice to £2000.
Many of these measures are not due to come into force until April 2026 or later, but could have a profound effect on the financial resilience and wellbeing of families across the country. By using smart data, we will be able to see some of these effects in near real-time and trace the impact on people’s lives over time.
At Smart Data Foundry our mission is to make private sector data more accessible for the public good. By supporting experts who can combine local knowledge and domain experience to access deeper data insight, we see what’s possible when evidence and experience come together.
In this blog we’ll take a look at some of the Budget’s headline-grabbing announcements which will have a direct impact on people’s finances.
Lifting of the two-child benefit cap – assessing the impact of poverty reduction measures
With 31% of children in the UK living in poverty, this is a measure which campaigners such as The Resolution Foundation say will have the greatest chance of lifting those children out of poverty:
Fully scrapping the two-child limit remains the most cost-effective way of driving
down rates of child poverty. This bold move could lift 330,000 children out of
poverty today and prevent a further 150,000 from falling into poverty by 2029-30.
(Resolution Foundation)
Lifting the cap for families with 3 or more dependent children allows them to claim benefits such as universal credit and child benefit for all eligible children in the household from April 2026, providing extra cash for essentials like food, clothing and heating.
We will be able to see the impact of this change in near real-time, by combining anonymised financial data with contextual data in our Economic Wellbeing Explorer. Because the financial data is updated monthly, we can see within weeks how the uplift in benefits income affects people's economic wellbeing across metrics such as the frequency of overdrawn accounts, spending 120% or more of income and low emergency resilience and can see how this improves in areas with a high concentration of families with 2 or more dependent children.
Researchers can also request access to microdata which provides a more granular view of income, income source and the aforementioned economic wellbeing variables. Current research projects using this data include the Wellcome Trust funded Homes, Heat and Healthy Kids study, run by Dr. Olivia Swann of the Usher Institute. This study combines health, housing and financial data to identify the socio-economic determinants of health, with a particular focus on the respiratory health of children.
Increasing the National Living Wage and State Pension – impacts on personal economic wellbeing and business growth
The Chancellor announced that National Living Wage rates will, from April 2026, rise to:
- £12.71 an hour, up from £12.21 for over 21s (up 4%)
- £10.85 an hour, up from £10, for those aged 18-20 (up 8.5%)
- £8 an hour, up from £7.55 for those aged 16 or 17 (up 6%)
Living Wage increases should add £889 per year to the pre-tax salary of someone over 21 employed full-time in a minimum wage job.
The Budget also included provision for the State Pension to rise by 4.8% in April 2026 to:
- £12,547.60 a year, a rise of £574.60, for those who reached state pension age after April 2016
- £9,614.80 a year, a rise of £439.40, for those who reached state pension age before April 2016
These changes to incomes will be reflected in the average weekly income Economic Nowcast metric, updated each month, and also in the previously mentioned Economic Wellbeing indicators in the Economic Wellbeing Explorer.
The Low Pay Commission has estimated that almost 2 million people are set to benefit from National Living Wage increases, largely concentrated in hospitality and retail roles. However, these types of roles are more likely to have variable hours and therefore result in variable incomes; our Income Volatility data (provided in partnership with Joseph Rowntree Foundation) enables researchers to assess the impact of income volatility on people’s economic wellbeing.
However, whilst these increases will benefit employees, the potential flip side to this is the impact on SMBs who face rising costs of employment. This quarter’s Sage SMB tracker, published this week, shows that in Q3 2025 SMBs were able to offset the increased costs of Employers’ National Insurance with savings elsewhere, but with YoY headcount growth at 0.1% in the UK, rising costs of employment could further hinder the ability of businesses to invest in growth. These regular updates, using data derived from over 200,000 UK SMBs, will enable us to track how
businesses respond to the announcements made in the Budget.
Access near real-time, granular insights into economic wellbeing
For researchers wanting to delve deeper into the impact of the Autumn Budget as it unfolds over the next few years, our data catalogue contains curated datasets on themes such as overdrawn accounts and unspent income, as well as details of microdata collections on economic wellbeing and income volatility. We offer this data to the research community as Smart Data Research UK’s Financial Data Service.
