UK Budget 2026: Chancellor John Healey's cautious course

A cautious budget with a record number of small measures

UK Chancellor John Healey presented his first budget on Wednesday. BBC political editor Chris Mason described it as aflotilla of small measures: the 150-page Red Book lists 98 measures — noticeably more than usual and more than in the budgets of his predecessor Rachel Reeves — yet almost all of them are small in their impact on the treasury. The budget overall is more modest in terms of taxes and spending than many recent ones.

Who is affected by the tax rises

Since Labour promised not to raise income tax, national insurance and VAT — the main sources of revenue — the government had to look for money elsewhere. Taxes have been raised on savers, landlords and banks. Mason notes the political risk of this approach: it affects specific groups that can react loudly — by analogy, he recalls the farmers outraged by changes to inheritance tax under Reeves.

Support measures and reaction

Healey announced £100 off energy bills for millions of households and higher taxes on banks. According to the BBC, the support covers all households in Council Tax bands A to D — in the view of Luke Tryl of the think tank More in Common, this allowed the chancellor to avoid the trap of the measures being perceived as aimed only at benefit recipients. Tryl believes that the budget's softly populist tone — taxing banks, landlords, gambling companies and vape shops while funding cost-of-living help, small business reliefs and no tax on the state pension — will probably resonate with the public. The opposition criticises the budget for its thinness from various angles; the government responds that this is only part of an emerging picture that includes a youth employment plan and benefit cuts before Christmas.

Background and uncertainty

The Office for Budget Responsibility (OBR), in its published economic and fiscal forecast, states that the economic and fiscal position of the United Kingdom remains very challenging, noting further adverse events this year linked to the conflict in the Middle East, and assesses the chances of a significantly better or worse scenario as roughly equal. The Red Book, however, claims that the economy is showing signs of resilience, although public debt, the tax burden, inflation and interest rates are high or rising. In Mason's assessment, the chancellor had limited room to act: any measures, even expensive ones, can only make a grim situation slightly less bad, rather than improve how people actually feel.

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