Healey Budget offers help for families and firms hit by global economic storm

Millions of households will receive £100 to help with soaring energy bills and high street firms will get a tax break as John Healey sought to protect British workers and businesses from the economic impact of the Iran war.The Chancellor 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, Mr Healey said.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.”Mr Healey hiked taxes on banks and gambling firms to provide “breathing space” he promised for households and high street businesses.But 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”.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.The support will reach 80% of households in England, 83% of fuel-stressed households, and 88% of those in the bottom three income deciles, the Government estimates.Recipients can spend the cash landing in their bank account from January as they wish.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”.Read MoreDespite 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.Key measures announced include:– The freeze in fuel duty has been extended until July next year.– Hiking machine games duty from 20% to 25% for higher-stakes gambling machines, with adult gaming centres and vape shops not benefting from business rate reliefs.– The national minimum wage and national living wage will increase by 3.9% for 2.3 million workers.– The £4.7 billion black hole in the defence investment plan will be funded, in part through taking money from capital budgets across Whitehall.– An extra £10 billion of additional economic and military support to Ukraine, and half a billion in urgent military funding this winter.– A new founders’ relief to encourage start-up businesses.The OBR said the UK’s “economic and fiscal position remains very challenging” after almost two decades of shocks and stagnation, pushing up the national debt.“Since 2008, repeated adverse shocks have contributed to persistently weak GDP growth and elevated levels of government borrowing.“This has resulted in a sharp increase in government debt as a share of GDP, to a level that is high by both recent historical and international standards.”The Government is expected to borrow more every year than had been forecast in March, with the cost of that borrowing also set to increase.Borrowing is around £18 billion higher this year, £16 billion in 2027-28, and an average of £11 billion a year over the following years, the OBR said.The cost of debt interest is expected to be £15 billion higher this year and then £12 billion a year more on average in the years to come.The jump in borrowing costs is linked to Mr Healey lowering his fiscal headroom against the Government’s self-imposed spending rules to £15 billion in 2029-30, from a previous prediction of £26 billion.But borrowing as a share of the economy is forecast to fall from 4.4% last year to 4.2% this year, continuing to decline to reach 1.8% in 2030-31.High inflation, largely due to the energy price shock of Donald Trump’s military action against Iran, will contribute to a painful squeeze on living standards.The OBR said it was expecting “no real earnings growth in 2027”, with household disposable income set to fall in the near term before recovering slightly, but even in 2030-31 it is set to only be 2% above pre-pandemic levels.Tory leader Kemi Badenoch said the Budget is “not good enough, not strong enough, not bold enough” as the UK remains “overspent, overborrowed, overtaxed and drowning in an out-of-control welfare system”.