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Sun, 11 Oct 2026

Sun, 11 Oct 2026 Iran war threatens Healey's Budget plans, think tank warns

The impact of the Iran war poses significant risks for the government’s spending plans, the Institute for Fiscal Studies says.

* The Institute for Fiscal Studies (IFS) has warned that Chancellor John Healey's first Budget will face a major challenge due to higher-than-expected inflation caused by the US-Israel war in Iran.
* The IFS estimates that higher inflation could eat into the government's spending plans, forcing Healey to choose between spending cuts, tax rises, or a combination of both.
* The Treasury declined to comment on the situation, but Healey said his Budget would "build on this approach with fiscal discipline helping to deliver economic resilience" and give people "breathing space".
* However, the IFS cautioned that making unrealistic future spending announcements in the Budget could damage the government's credibility.
* The think tank estimates that the government may need to find an extra £25bn in 2029-30 to maintain departments' budgets in the face of higher inflation.
* Raising such a large amount would likely require significant tax rises, but Healey may choose to leave decisions on spending totals until future events, such as next year's Spring Statement or Spending Review.