Chancellor John Healey used his first Budget to warn of economic storms ahead, blaming turmoil in the Middle East for surging energy prices and higher inflation, while offering few giveaways that would suggest an imminent snap election.
Middle East Blamed for Economic Drag
Mr Healey spoke so extensively about the war in the Middle East that his speech at times resembled that of a defence secretary rather than a Chancellor. The conflict was cited as the cause of the spike in energy prices and inflation, which the Chancellor identified as the main drag on Britain's prosperity, rather than Labour's record in its first two years in power.
He triggered uproar early in his address by praising Rachel Reeves, saying: "She took the decisions required." His tone was neither that of a self-styled "Master of the Universe" like George Osborne nor a social crusader like Gordon Brown, but closer to Vince Cable, the former business secretary known for his warnings during the Conservative-Lib Dem coalition.
Growth Forecast and Debt Costs
Speaking softly, Mr Healey warned not of headwinds but of storms, a view backed by the Office for Budget Responsibility. Growth of just 1% is expected next year, down from 1.6%, and Britain will spend £14 billion more on debt interest this year.
The Budget focused on battening down the hatches, with plans to pay £100 in energy payments into bank accounts, reflecting how the spike in oil and gas prices has overshadowed any prospect of economic recovery.
High Street and Housing Measures
The Chancellor acknowledged public anger over the hollowing out of high streets, raising taxes on gambling to fund business rate cuts elsewhere, with no relief for vape shops and adult gaming centres. He described ending rough sleeping as a "moral mission" and highlighted efforts to rebuild council housing and support first-time buyers.
This was a deliberately low-key Budget. Andy Burnham and Mr Healey are preparing to launch their 10-year plan and next year's spending review. A key challenge is boosting defence spending, a priority for the former defence secretary who resigned over underfunding.
The absence of large giveaways suggests a snap election is not imminent. Instead, the message is that winter is coming, and the days of Britain motoring in the global economy's fast lane remain a long way off.
