Iran war threatens Healey's Budget plans, think tank warns
The Institute for Fiscal Studies has warned that the UK government faces significant budget challenges due to inflation driven by the US-Israel war in Iran. Chancellor John Healey is under pressure to balance public service spending against the need for fiscal discipline amid rising borrowing costs.
Why it matters
Economic instability in the Middle East is directly impacting UK domestic policy and the upcoming national budget, forcing difficult trade-offs for the government.
Image source, Dan Kitwood/Getty Images By Dharshini David , Deputy economics editor and Tom Espiner , Business reporter Published 11 minutes ago The price spike caused by the US-Israel war in Iran poses a major challenge for Chancellor John Healey as he puts together his first Budget, an influential think tank has warned.
Higher-than-expected inflation could eat into what the government hoped to spend on public services, meaning Healey will have to choose between spending cuts, tax rises, or a mixture of both, the Institute for Fiscal Studies (IFS) said.
It urged the government to ensure its spending plans are credible, as opposed to proposing unrealistic future cuts to make the Budget add up.
The Treasury declined to comment on "rumour and speculation".
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