Budget 2026: key points at a glance

John Healey has announced his first budget – here are the main points, with political analysis

• Healey offers £100 payment to households to help navigate ‘global economic storms’

• UK growth forecast for 2027 slashed despite Healey’s budget measures

John Healey starts by saying that his budget is “delivered at a time when global uncertainties and pressures are swirling worldwide and hitting people here at home”.

Healey says he will meet the fiscal rule that day-to-day spending must be covered by tax receipts, and the investment rule that government debt, defined as public sector net financial liabilities, must be falling as a percentage of GDP in the third year of the forecast.

The government will have £15bn of headroom in 2029-30 and £22bn in 2030-31, according to the Office for Budget Responsibility, the government’s forecaster.

Government borrowing will be 4.2% of GDP this year, 3.4% next year, then 2.9%, 2.1% and 1.8% by 2030-31, the OBR says.

Predictions of slowing growth were wrong, Healey says. The OBR says GDP will grow by 1.2% this year, 1% next year, 1.6% in 2028, 1.8% in 2029, 1.7% in 2030 and 1.6% in 2031. In March the OBR had predicted GDP growth of 1.1% in 2026, rising to 1.6% in 2027 and 2028, and dropping to 1.5% in 2029 and 2030.

Government debt is forecast to be 83.2% of GDP this year, 83.8% next year then falling to 83.1%, 82.3% and 81.7% in the following years.

Labour’s priority is cheaper energy, Healey says. He announces a series of measures to try to cut bills, including scrapping a levy on bills to fund hydrogen to lower bills and moving older renewables onto fixed-price contracts.

Healey says the government will extend a VAT cut through the winter and spring to July, taking £50 pounds off the annual price cap.

He confirms the government is abolishing standing charges on gas bills for 23m homes in a move it says will save two-thirds of households an average of £45 a year.

He says 20m households in council tax bands A to D will receive a £100 energy payment paid directly into bank accounts. It will cost £2.6bn, he says.

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