Few surprises as chancellor uses low-key speech blaming ‘global economic storms’ for stoking energy prices and cost of living crisis

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John Healey raised taxes on banks and landlords to fund a £100 winter handout for 20 million families as official forecasts made clear there is no end in sight for the cost of living crisis.

In his first budget, the chancellor blamed “global economic storms” for the grim outlook, as the war in Iran drives up oil and gas prices.

How the Burnham government’s first attempt to ease cost of living pressure pans out for key stakeholders
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Every budget has its winners and losers, and John Healey’s first as chancellor was no exception. While some gained from tax breaks and rule tweaks, others will either pay more, or had their hopes of reforms dashed. Here are some of those with reason to cheer, or sigh:

Use our interactive tool to see how you have been affected by John Healey’s tax and spending announcements

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OBR cautions about Middle East war dragging down growth and triggering a fresh cost of living crisis

• Healey offers £100 payment to households to help navigate ‘global economic storms’

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British households face a “pretty grim picture” for living standards as the war in the Middle East drags down growth and triggers a fresh cost of living crisis, the government’s independent forecaster has said.

In a report as John Healey announced his first budget, the Office for Budget Responsibility (OBR) issued a sharp downgrade for growth in 2027, household disposable incomes and the public finances despite the measures taken by the chancellor.

Payment to 20m homes part of package to help cut energy bills and ease cost-of-living crisis, paid for by smaller than expected bank windfall tax

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John Healey promised to steer Britain through “global economic storms,” as he announced a package of measures to cut consumers’ energy bills, funded by a smaller-than-expected windfall tax on banks.

In his first budget, the chancellor said 20m households in council tax bands A to D would receive a £100 payment – a measure he said would cost £2.6bn.

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John Healey starts by saying that his budget is “delivered at a time when global uncertainties and pressures are swirling worldwide and hitting people here at home”.

Healey says he will meet the fiscal rule that day to day spending must be covered by tax receipts and the investment rule that government debt, defined as public sector net financial liabilities, must be falling as a percentage of GDP in the third year of the forecast.

The government will have £15bn of headroom in 2029-30 and £20bn in 2030-31, according to the Office for Budget Responsibility, the government’s forecaster.

Government borrowing will be 4.2% of GDP this year, 3.4% next year, then 2.9% and 2.1% 1.8% by 2030-31, the OBR says.

Predictions of slowing growth were wrong, Healey says. The OBR says GDP will grow by 1.2% this year, 1% next year, 1.6% in 2028, 1.8% in 2029, 1.7% in 2030, 1.6% in 2031. In March the OBR had predicted GDP growth of 1.1% in 2026, rising to 1.6% in 2027 and 2028, and dropping to 1.5% in 2029 and 2030.

Government debt is forecast to be 83.2% of GDP this year, 83.8% next year, and then falling to 83.1%, 82.3% and 81.7% in the following years.

OBR says that living standards are forecast to rise by just 1% over the whole post-Covid decade

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Martin Lewis said that, when he met John Healey this morning, the chancellor said that, having removed standing charges from gas bills, he would also like to get rid of them from electricity bills. Lewis said:

The chancellor said he will be talking to Ofgem about how they get rid of the charge on electricity as well, but that is ‘trickier’ apparently and will take longer.

Struggling households, new homebuyers and small shops stand to gain, while banks and online marketplaces could face higher levies

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John Healey will present his first budget on Wednesday, which will set the tone for Andy Burnham’s premiership.

Despite the chancellor’s promises in the summer that the tax and spending event would not be beset by the leaks that preceded those of his predecessor, Rachel Reeves, both official and unofficial sources have indicated much of what Healey is likely to announce. Here’s what to expect: