Faster and smarter in the app... Open app

Chancellor on the beach
Tips & Advice · 5 min read · October 2026

Wednesday's budget won't protect your 2027 holiday

(But our advice might)

Short on time? Let us summarise this guide for you.

Fuel costs, higher household bills and fragile travel firms are squeezing 2027 holidays, and the Budget won't fix any of it. So act now. Book an ABTA and ATOL protected package on a deposit, fly with a UK or European airline, know your rights (including the 8% surcharge rule), buy euros while sterling is strong, and book your extras early. If the budget won't stretch, flex on destination or season rather than cancelling.

Booking your 2027 (or even 2028) holiday now, with the right protection, is the best way to beat rising costs. Waiting for better news is a gamble, and the latest news out of Downing Street isn't going to help.

The real problem

Three pressures are arriving together, and none of them is about tax.

Jet fuel is expensive and airlines are running out of cover. Brent crude hit $113 a barrel on 22 October, a five month high, as tanker attacks continued near the Strait of Hormuz. Airlines normally buy fuel months ahead (called hedging), which has cushioned 2026. Those hedges are expiring. Ryanair's boss says European fares could rise 10% to 20% over the next twelve months, and the airline has hedged only 15% of its fuel for the year from April 2027, against 80% to March 2027, as he told reporters on 20 October.

Household bills are rising too. UK inflation hit 3.5% in September, driven by fuel. Two year fixed mortgages now average about 5.96%, and 54 of 63 economists polled by Reuters expect the Bank of England to raise rates in November. Cornwall Insight forecasts that the energy price cap will jump about 16% in January, though Ofgem has not yet confirmed it.

Some travel firms may not weather the economic headwinds. A count by GB News earlier this year put the number of UK travel companies that had collapsed or lost their ATOL protection since 2025 at ten, mostly small operators. In June, Fitch Ratings revised its global airline outlook to “deteriorating” on higher fuel costs. Fewer seats are on offer as well: Ryanair has cut quiet winter flights and trimmed its passenger target by two million.

Will the Budget make any difference? Bluntly, no.

On everything reported so far, the 28 October Budget will not change what a holiday costs next year. The government has said it will not raise income tax, National Insurance or VAT rates, and commentators expect a low drama Budget with the big decisions left until next year. The one aviation lever, Air Passenger Duty (APD), is already set to rise in April 2027.

  • Fuel duty: the 5p cut runs to 31 December, and duty is due to rise by 3p a litre on 1 January and 2p on 1 March 2027. That is the schedule left after the government scrapped the earlier September and December rises in May. The FT reports that the Chancellor will drop both. A small help if you drive to the airport.
  • Energy bills: targeted winter support is reportedly planned, but the January price cap is still forecast to rise.
  • Air Passenger Duty: already due to rise 49p, from £15 to £15.49, for the lowest class of travel on flights of up to 2,000 miles (Band A, reduced rate) from April 2027. Industry calls for a freeze look unlikely to be met.
  • Jet fuel: nothing in the expected package addresses it.

The Budget is a sideshow. What matters is what you do before prices move.

What can you actually do?

1. Book an ABTA and ATOL protected package early, on a deposit

Lock in your price and your trip now. Protected packages can often be reserved for a small deposit, such as £60 per person at Jet2holidays, and Jet2, TUI and easyJet have all pledged not to add fuel surcharges to booked holidays. Check the pledge covers your dates: easyJet's original wording applied to summer 2026 bookings.

Do the same for summer 2027, or even 2028 if you're planning that far ahead. Holidays are already on sale for the next two summers, and tour operators are adding capacity. Early prices may not yet reflect the full cost of fuel that airlines have not hedged, though that is a judgement, not a certainty.

Protection matters. Package holidays that include flights and are sold by UK travel firms should be ATOL protected, which helps with refunds and getting home if the operator fails. Check that your booking comes with an ATOL certificate, and look the firm up on the Civil Aviation Authority's ATOL pages. Not every booking is covered: some flight-only bookings are protected, depending on how and where you book them, but flights bought directly from an airline, and accommodation-only bookings, are not.

One honest caveat: if the war in the Middle East comes to an end, fuel prices could fall fast. Brent dropped nearly 13% in a single day when a ceasefire was agreed in April. You might lock in at a higher price, but that risk is smaller than facing higher fares and fewer seats.

2. Fly with a UK or European airline, and know your rights

Choose a UK or European airline. Shorter flights are less exposed to fuel costs than long haul, where airlines expect to pass increases on first. A UK or European carrier also gives you the strongest protection on the return leg, because UK and EU passenger rights apply to flights back to the UK on UK and EU airlines, but not to flights back on most other airlines.

Know these rights before you book:

  • The 8% rule. On a package holiday, the operator can pass on a fuel cost rise after you book, but only if your contract allows it, and it must give you at least 20 days' notice with a calculation. If the increase is more than 8% of the package price, you can cancel without a fee and get a full refund within 14 days. Smaller increases can still apply, so this is a safety valve rather than a cap on what you might pay. Many firms have pledged no surcharges at all.
  • A cancelled flight. If an airline cancels, you have a legal right to choose between being re-routed or a refund.
  • Getting home. UK and EU passenger rights cover flights leaving the UK or EU on any airline, and flights arriving in the UK or EU on a UK or EU airline. If your flight is cancelled you must be offered a choice of rerouting or a refund, plus meals and accommodation where it applies. That is not a guarantee of getting home on a particular timetable, but it is why a UK or European airline is the safer choice for your return. The Civil Aviation Authority publishes the details.
  • If a firm fails. ATOL protects most flight inclusive packages, so check you have a certificate. If you book a flight on its own, paying by credit card adds Section 75 protection on purchases over £100, and it is worth checking your travel insurance for airline failure cover.

3. Buy in Euros now

Sterling is at its strongest against the euro this year, which makes this a reasonable moment to buy. It has traded between about €1.14 and €1.195 in 2026 and was around €1.195 on 23 October, at the top of that range. Bank forecasts mostly expect it to slip back. In an Exchange Rates UK survey published on 27 September, the median forecast for the second quarter of 2027 was about €1.15, with ING lowest at €1.12 and Bank of America highest at €1.19. That survey was taken when the pound was nearer €1.16, so a fall from today's level to €1.15 would mean about 4% fewer euros for every pound.

Forecasts are often wrong, in both directions, and buying in instalments spreads the risk but does not guarantee a better average rate than buying in one go. Pay for accommodation in euros up front where you can, and load a prepaid travel card or buy cash in a few instalments before you go. Package prices are largely shielded because operators hedge their currency, so this matters most for spending money and independent bookings.

4. Decide what to compromise on, and book the whole trip early

If the budget will not stretch, flex the trip rather than abandon it.

  • Pick a cheaper destination with great facilities. Look beyond the usual hotspots. More choice gives you more room to find a bargain.
  • Go in shoulder season. May, June, September and October are usually cheaper than August. Climate change also means a trip to the sun in shoulder season may be more comfortable than one in August.
  • Book the extras at the same time. Airport parking, lounges, transfers and travel insurance can cost more as departure nears and availability tightens. Insurance bought when you book covers you from that day, but what is covered depends on the policy and its terms, so check the cancellation and airline failure cover. With pump prices at a four year high, the drive to the airport is dearer too, so know the full cost before you leave.
  • Budget for local taxes. Several destinations raise visitor taxes in 2027, including the Basque Country from January and Catalonia from April. The sums are small per night, but they add up.

Summary and recommendations

You cannot control jet fuel prices, war, interest rates or the Budget. You can control when you book, how well you are protected and where your money sits. Your checklist:

  • Book an ABTA and ATOL protected package on a deposit, for this winter and summer 2027.
  • Pay by credit card where you can, for Section 75 protection on purchases over £100.
  • Choose a UK or European airline. For extra security, travel within Europe.
  • Check the no surcharge pledge, and remember the 8% rule.
  • Buy Euros now, in instalments, or book anything you'll pay for in Euros now.
  • Consider shoulder season or a cheaper destination.
  • Book parking, transfers and insurance with the holiday. Last year, most of our customers saved at least £150 on their parking by booking in advance.

Sources: Reuters (reporting the Financial Times), RAC Foundation, RTE, Travel Weekly, GB News, Fitch Ratings, ONS, Cornwall Insight, Deloitte Taxscape, the Civil Aviation Authority, Exchange Rates UK and bank currency forecasts, CBS News and airline and tour operator statements. Figures are as of 23 October 2026 and can change quickly. The passenger rights summary is general guidance, so check the Civil Aviation Authority's pages for your own situation. Exchange rate forecasts can be wrong.


Most-popular articles