Chancellor warns tough budget due to Middle East war

Chancellor John Healey has warned that the UK faces a tough autumn Budget on October 28, citing the economic fallout from the ongoing war in the Middle East as a major pressure point. In an interview with the Financial Times, Healey stated that the conflict, which involves US military action against Iran, is driving up inflation, suppressing growth, and increasing government borrowing costs. This comes as UK government bond yields recently hit an 18-year high, reflecting investor anxiety about the inflationary impact of the conflict and its potential effect on global energy markets. Healey, who became Chancellor after Andy Burnham became Prime Minister in July, said his first Budget would aim to ensure the public finances retain a substantial buffer against global uncertainty. He emphasized that he and the Prime Minister are "in lockstep" in their determination to meet the government's fiscal rules, which require day-to-day spending to be covered by revenues by the end of the parliament. However, he declined to specify the exact level of fiscal headroom he plans to maintain.