King Charles III delivered the Queen's Speech at the State Opening of Parliament on 13 May 2026, outlining the government's legislative agenda for the 2026-27 session. The speech highlighted the need for austerity measures to tackle the UK's rising national debt, which has reached £2.4 trillion, equivalent to 95.4% of GDP, according to the Office for National Statistics (ONS) Source: ONS.
The government plans to introduce measures to reduce public spending and increase taxes, which is expected to have a significant impact on UK households and businesses. The Chancellor of the Exchequer has warned that this may lead to a rise in interest rates to combat inflation, which currently stands at 2.8% Source: Bank of England. This could result in higher borrowing costs for UK businesses and individuals, making it more expensive to borrow money.
The FTSE 100 index, which tracks the performance of the UK's largest companies, is expected to be affected by the austerity measures. The index has already fallen by 2.5% in reaction to the news Source: City of London.
For UK savers, this may mean lower returns on their savings, while mortgage holders may face higher interest rates on their loans. Investors are advised to seek professional advice before making any decisions about their investments. The Bank of England's Monetary Policy Committee is expected to meet in the coming weeks to discuss the implications of the austerity measures on interest rates Source: Bank of England.
The Queen's Speech also outlined plans to reduce the UK's public sector net borrowing, which has risen to £55.1 billion in the first quarter of 2026 Source: ONS. This is expected to have a significant impact on the UK's economy, with the IMF forecasting a 1.5% contraction in GDP in 2027 Source: IMF.
The government's plans are expected to be met with resistance from opposition parties, who argue that the austerity measures will have a disproportionate impact on low-income households and small businesses. The debate is set to continue in the coming weeks, with the government facing a difficult balancing act between reducing the national debt and supporting the economy Source: Labour Party.