By Ahmed Abdelsalam
Chancellor John Healey will use his first Budget to freeze fuel duty and introduce measures aimed at permanently lowering energy bills, as the government seeks to ease cost-of-living pressures amid global uncertainty.
Economic backdrop
Healey acknowledged a "difficult moment" with conflicts abroad pushing up energy prices, but highlighted UK economic resilience including joint fastest G7 growth in the first half of the year.
Fuel duty freeze and energy reforms
The Chancellor is expected to cancel January's planned increase in fuel duty, keeping the rate frozen for a 16th year at 52p per litre. He also plans to decouple gas and electricity prices and shift green levies from energy bills to general taxation, according to reports.
Support for households and businesses
The Budget will make a higher tax-free mileage allowance of 55p permanent and cut tariffs on foods such as chocolate, beans and gherkins. The minimum wage will rise nearly 4%, with the rate for 18- to 20-year-olds aligned more closely with that for older workers. The Carers' Allowance "cliff edge" that penalises unpaid carers for exceeding earnings limits will be ended.
Fiscal rules and political reaction
Healey will adhere to fiscal rules set by predecessor Rachel Reeves, requiring day-to-day spending to be funded by taxes by 2029/30 and public debt to fall as a share of the economy. Prime Minister Andy Burnham has ordered ministers to examine scrapping standing charges on gas bills. Shadow Chancellor Andrew Griffith warned that public finances are on a "cliff edge" and demanded a clear path to 3% defence spending by 2030. Liberal Democrat deputy leader Daisy Cooper called for deeper cuts and UK rejoining the EU single market, while Reform UK's Robert Jenrick described the Budget as "fiddling while the economy burns."
