Arabic version: الميزانية تواجه اختبار الوعود والقيود الاقتصادية

According to BBC News, the government’s Budget will be shaped by the tension between its ambitions and pressures including high taxes, national debt, rising energy bills and higher-than-expected inflation.

Chancellor John Healey said last month that “The money New Labour had in the 90s is simply not there now….Britain has it harder now.” Prime Minister Andy Burnham, shortly before taking office, described the change sought by the government as “the most significant change moment in our politics for 40 years.”

Helen Miller, director of the Institute of Fiscal Studies, said the government has “seemingly big ambitions” while facing “a long list of constraints”. Ministers nevertheless argue they can act, with targeted cost-of-living help, particularly for the most vulnerable, expected to be a focus. Banks are preparing for a possible levy or surcharge that could fund such support.

The Budget is also expected to include further defence spending, although plans for spending 3% of national income on security by 2030 will not be set out until next year’s Spending Review. Devolution will be another central element, with Healey promising a “really radical devolution of powers and resources to local leaders”.

The chancellor will point to stronger-than-forecast growth and productivity, as well as lower unemployment. But the Resolution Foundation said conflict in the Middle East has pushed up energy prices and interest rates again. With pledges not to raise income tax, national insurance or VAT, the Budget is expected to be smaller in scale than recent fiscal events, leaving a debate over whether it can meet the government’s promises.