UK budget offers £100 energy payments to 20 million households as IFS warns of grim outlook
Chancellor John Healey's first budget under Prime Minister Andy Burnham offers £100 energy bill payments to around 20 million households, but the IFS and OBR warn of weak growth and falling living standards.
Britain's Chancellor of the Exchequer, John Healey, has unveiled a budget built around help for households with energy bills, in the first budget of Prime Minister Andy Burnham's government - but independent forecasters have warned that the outlook for living standards remains grim.
Around 20 million households in lower-value properties will receive a one-off payment of £100 to cushion rising energy bills, a measure costing £2.6 billion. Healey also extended the freeze on fuel duty, keeping the temporary five-pence cut in place until at least July at a cost of £1.4 billion. The package is funded by raising taxes on banks, gambling companies, savers and landlords, and by tightening tax rules for online marketplaces.
The Office for Budget Responsibility expects the economy to grow by 1.2 per cent in 2026, but has cut its 2027 growth forecast sharply to 1.0 per cent, from 1.6 per cent in March. It expects inflation to peak at 3.8 per cent in early 2027 and says living standards will fall before barely recovering to pre-pandemic levels by 2030. The Institute for Fiscal Studies warned the plans could leave a substantial funding gap by 2030-31, while forecasters said the measures, combined with inflation and higher borrowing costs, could add £65 billion to government debt over five years.
Healey told parliament the economy faced a hit from the conflict in the Gulf, global trade tensions and the war in Ukraine, and framed the budget as relief from what he called "global economic storms". He also confirmed a target of spending 3 per cent of GDP on defence by 2030, with the detailed route to that level to come in next year's spending plans - a commitment opposition MPs and the Defence Committee pressed the government to explain during Thursday's Commons scrutiny.
Defence Secretary Wes Streeting defended the government's record in the debate, while critics argued the budget raises taxes without setting out how its spending ambitions will be paid for in the longer term.
