John Healey starts by saying that his budget is \u201cdelivered at a time when global uncertainties and pressures are swirling worldwide and hitting people here at home\u201d.<\/p>\n
He said the administration will have a new approach to steer us through global economic storms and give people fresh hope for Britain\u2019s future.<\/p>\n
He said it is an honour to deliver a budget as chancellor, before paying tribute to Rachel Reeves\u2019s fiscal discipline. She took the difficult decisions required, he said.<\/p>\n
Trade tensions are acting as a drag on global economic growth, as is the war in Iran, he said. The UK did not want this war, and it has driven up costs for British families through higher energy costs and higher interest rates.<\/p>\n
The UK will spend \u00a314bn more on debt interest this year.<\/p>\n
Fiscal discipline is his first priority as chancellor, Healey said.<\/p>\n
Peter Walker, senior political correspondent: A very immediate pr\u00e9cis of the main political points of his first budget, with Healey talking up \u201cbreathing space\u201d on the cost of living and a break from the Keir Starmer era, but also a mention of the \u201cglobal uncertainties\u201d which \u2013 and he cannot say this \u2013 might make his tweaks and changes slightly moot. This is set out more explicitly with a long section on the Iran war, and a note that the UK did not seek it.<\/p>\n
Growth and inflation forecasts<\/p>\n
Healey said 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.<\/p>\n
The government will have \u00a315bn of headroom in 2029-30 and \u00a320bn in 2030-31, according to the Office for Budget Responsibility, the government\u2019s forecaster.<\/p>\n
Government borrowing will be 4.2% of GDP this year, 3.4% next year, then 2.9%, 2.1% and 1.8% by 2030-31, the OBR said.<\/p>\n
Predictions of slowing growth were wrong, Healey said. The OBR said GDP will grow by 1.2% this year, 1% next year, 1.6% in 2028, 1.8% in 2029, 1.7% in 2030 and 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.<\/p>\n
Government debt is forecast to be 83.2% of GDP this year, 83.8% next year then falling to 83.1%, 82.3% and 81.7% in the following years.<\/p>\n
PW: A statistics-rich part of the speech which is largely for economists and MPs, but Healey is at pains to argue that the government is treating the deficit seriously, which is a key element in trying to shape reaction. This section also brings the first joke in the speech, one which is \u2013 something now almost as traditional as a freeze of fuel duty \u2013 about Liz Truss and her mini budget.<\/p>\n
Energy costsThe chancellor announced a series of measures to cut energy costs, including extending VAT cut. Photograph: Alamy\/PA<\/p>\n
Labour\u2019s priority is cheaper energy, Healey said. He announced a series of measures to try to cut bills, including scrapping a levy on bills to fund hydrogen to lower bills and moving older renewables onto fixed-price contracts.<\/p>\n
Healey said the government will extend a VAT cut through the winter and spring to July, taking \u00a350 pounds off the annual price cap.<\/p>\n
He confirmed the government is abolishing standing charges on gas bills for 23m homes in a move it said will save two-thirds of households an average of \u00a345 a year.<\/p>\n
He said 20m households in council tax bands A to D will receive a \u00a3100 energy payment paid directly into bank accounts. It will cost \u00a32.6bn, he said.<\/p>\n
PW: A political balancing act from the chancellor, going from the \u201cpragmatic, commonsense decision\u201d to approve the Jackdaw gas field \u2013 not popular with all Labour MPs \u2013 with talk of being \u201cunshakeably committed\u201d to net zero and a course towards cheaper energy based on clean sources. But again the main commitment is on the cost of living, and the much-trailed plan to remove standing charges from gas bills, plus a small-to-mid-sized rabbit of a one-off \u00a3100 energy payment for smaller homes.<\/p>\n
Wages and cost of living measures<\/p>\n
Fuel duty will be frozen for the 16th year in a row. Every government forecast over that time has pretended it will then rise in future years to raise more cash, only for the freeze to continue.<\/p>\n
Healey increases the higher mileage rate for people who use their cars for work from \u00a30.25 to \u00a30.30 a mile.<\/p>\n
Healey said he will remove import tariffs on more than 100 products, including baked beans, chocolate and gherkins, to reduce their shop prices as trailed before the budget.<\/p>\n
On paternity leave, self-employed fathers will be eligible for paternity leave pay for the first time.<\/p>\n
Healey confirmed that both the national minimum wage and the national living wage will rise by 3.9% in April. The national living wage, for over-21s, was set at \u00a312.71 from April 2026, while the national minimum wage for people aged 18 to 20 was \u00a310.85.<\/p>\n
He confirmed the removal of a \u201ccliff edge\u201d for carers\u2019 allowance<\/a> which left some people with debts in the thousands of pounds for accidentally claiming the benefit when they crossed an earnings threshold, in a policy trailed before the budget.<\/p>\n PW: A further freeze on fuel duty? Yes, yet again. The least surprising part of every recent budget.<\/p>\n The high streetPedestrians browse shops and restaurants on Exmouth Market in London. Photograph: Joe Dunckley\/Alamy<\/p>\n Healey said he will increase the threshold for small business rate relief for retail, hospitality and leisure businesses from \u00a312,000 to \u00a318,000, giving a tax break to 70,000 smaller firms. Adult gaming centres and vape shops will not qualify.<\/p>\n On gambling, machine games duty will rise from 20% to 25% for higher stakes machines.<\/p>\n Online marketplace sellers will be targeted to ensure they are unable get around VAT.<\/p>\n PW: The state of local high streets is a hugely common complaint among voters and MPs alike, even if the causes of their decline are many and long-term. But more help with business rates for shops and hospitality businesses will be welcome and popular, and few outside the industry will complain about paying for it through higher taxes on gambling.<\/p>\n Business and personal taxes<\/p>\n Healey said there will be new funding from HMRC to improve compliance and stronger powers to collect overdue tax from those who \u201ccan clearly afford to pay but ignore repeated contact\u201d.<\/p>\n There will be no change on tax on income from dividends, and no change on tax to income from employment.<\/p>\n Healey confirmed he will reverse his predecessor\u2019s decision to cut the tax-free allowance<\/a> on cash individual savings accounts (ISAs) from \u00a320,000 to \u00a312,000 a year from April.<\/p>\n