Chancellor John Healey will deliver his first Budget on Wednesday (October 28) against a difficult economic backdrop, worsened by market turmoil linked to the Iran war and higher government borrowing costs. Fiscal headroom is expected to be narrower than the £22 billion that Rachel Reeves had doubled through tax rises at last year's Budget, which could weaken confidence among lenders and investors. The Institute for Fiscal Studies argues the Chancellor should be more worried about spending pressures, as inflation erodes the value of departmental cash budgets. The Budget is expected to address pledges such as cutting VAT on energy bills this winter and slashing business rates for pubs, clubs and live music venues, and to set out a plan to cut red tape that the Treasury estimates could save small businesses up to £800 million. Healey has ruled out a capital gains tax rise but is reportedly considering increasing the surcharge on bank profits from 3% to 8.
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