Chancellor John Healey has delivered his first Budget, offering £100 to millions of households to help with soaring energy bills and a tax break for high street firms, as he sought to protect British workers and businesses from the economic impact of the Iran war.
Mr Healey said the UK was being battered by a global economic storm, with the Budget watchdog slashing its forecast for gross domestic product growth next year. The public finances have also taken a battering, with the cost of borrowing soaring and the UK spending £14 billion more on debt interest this year, he said.
Tax rises on banks and gambling firms
Mr Healey hiked taxes on banks and gambling firms to provide the “breathing space” he promised for households and high street businesses. He said the Office for Budget Responsibility had identified the war in the Middle East as the key driver in the economic forecasts.
The Chancellor told MPs: “Those are the storms we face. We can’t wish them away. We must choose the course we steer through them.” He promised “to steer us through the global economic storms today, to chart a new course for Britain in the years ahead, to give people fresh hope for Britain’s future”.
Energy bills support package
The energy bills support package will cost £2.6 billion, with around 20 million households in council tax bands A to D receiving £100 from the Government this winter to help with the bills. Mr Healey said he was “looking to our banks to help fund breathing space for British families”, with the bank tax hike by an extra 3% for 15 months from January.
Mr Healey also announced an increase in gambling taxes to pay for business rates relief for high street firms. He said it would mean that 70,000 businesses would be taken out of paying rates altogether, “meaning half of our shops, restaurants and gyms will now pay no business rates at all”.
Growth forecasts revised
Despite the economic difficulties, the Office for Budget Responsibility increased its forecast for economic growth in 2026 from 1.1% in March this year to 1.2%. But the forecast for gross domestic product (GDP) growth was slashed from 1.6% to just 1.0% in 2027.
The forecast is then unchanged at 1.6% in 2028 before rising to 1.8% in 2029, then 1.7% in 2030 against forecasts of 1.5% in each of those years, then 1.6% in 2031.
