BREAKING: John Healey opens his Budget by blaming Donald Trump's war in Iran for rising prices and pressure on the public finances He says 'we did not want this war', describing it as a 'global economic storm' that is driving up prices 'Analysts like to speak to economic headwinds but what we face today are global economic storms 'The OBR sets out that the war in the Middle East is a key driver affecting their forecasts 'We did not want this war. We rejected calls from the leader of the opposition to jump two-footed into it 'It is a war that has driven up costs on British families and businesses. Inflation, which was due to fall, has now risen driven by higher oil prices. Gas prices have nearly tripled since February 'Driven by the conflict in the Middle East government borrowing costs across the G7 are reaching highs. The OBR predicts we will spend £14billion more on debt interest this year'

It's worth remembering that stealth taxes will still be at the heart of this Budget They represent the biggest tax rise in history Income tax thresholds have been frozen now since 2021 and are due to remain frozen until April 2031 The cumulative freezes of freezing thresholds and allowances is expected to raise ***£67billion*** by 2030/31 The higher rate - which was once the preserve of the rich - is now the norm for millions of people By 2030/31 5.2million people will have been brought into paying income tax, there will be 4.8million more higher rate taxpayers and 600,000 more additional rate taxpayers A ***quarter*** of taxpayers will be higher rate or additional rate taxpayers We've reached the stage where this huge tax raid is almost priced in every year, but it is far more significant than any other tax-raising measure on the scorecard Paul Johnson, a former head of the Institute for Fiscal Studies, said: "We are talking many, many billions of pounds of tax rises over the decade. People who would 20 years ago have never imagined they would be higher-rate taxpayers are now higher-rate taxpayers."

***The 2026 Budget - what to expect*** FISCAL HEADROOM * John Healey is expected to lower the fiscal headroom from £23bn to around £15bn after economic hit caused by Iran war * Ministers fear fresh military strikes by the US against Iran in wake of mid-terms will render OBR forecasts obsolete within days - worse is to come ENERGY BILLS *Healey will extend the warm homes discount for families on benefits, giving them another £100 off their energy bills * But households not on benefits will bear the full brunt of the rise in January, when bills are due to go up by 27% to an average of £2,192 * Gas standing charges will be scrapped next year, saving £27 on a typical bill although those with larger homes who use more energy will pay more * Healey will announce long-term plans to move more green levies off energy bills in a bid to reduce them 'for good * He's also expected to announce long-term plans to remove the link between gas prices and electricity prices FUEL DUTY * The fuel duty freeze - which was due to end in January - will be extended to help with soaring prices at the pumps BANKING TAX * The biggest 'revenue raiser' in the Budget. Healey has been lobbied to restore the 8% surcharge on corporation tax, which would raise £2bn ONLINE RETAILER TAX * Online retail giants like Amazon, eBay and Temu will be made responsible for collecting tax from retailers selling on their platforms FAMILY BUSINESSES * Thousands of high-street shops, cafes, pubs and hairdressers will no longer have to pay business rates. Move funded with online retailer tax MINIMUM WAGE * The living wage, paid by older workers, and the national minimum wage, paid by those aged 18 to 21, will increase by 3.9%. Healey has chosen to stop the huge rises in the minimum wage amid concerns it was pricing young people out of work PENSIONERS * Healey will announce plans to shield 1million pensioners from paying income tax * The state pension is due to rise by 3.9%, taking 1million people with low incomes above the income tax threshold * Healey will introduce a new tax allowance for low-income pensioners * He has also decided not to reduce the tax-free pensino lump sum DEFENCE SPENDING * Healey's immediate priority is filling £4.7bn hole in the defence investment plan. Cuts expected to departmental budgets elsewhere * He is also expected to announce additional borrowing to fund government investment vehicles, which will then be used to fund defence * But he WILL NOT set out a timeline for hitting the 3% defence spending target. That will come in the spending review next year HELP TO BUY * A revived Help to Buy scheme called Your First Home * It will offer first time buyers a 20% equity loan to help them buy a new-build home, with a minimum deposit of just 2.5% * The earnings cap will be set at £140,000 in London and £110,000 outside London RECORD TAX LEVELS * The OBR is expected to once again say that the tax burden will rise to another post-war record * It's being driven by fiscal drag. Half a million people will be dragged into paying the higher rate * The freeze - which is pencilled in for more than a decade - is effectively the single biggest tax rise in history OBR forecasts * They will highlight the huge uncertainty caused by the war in Iran. Ministers think it could make the OBR forecasts obsolete within weeks * The tax revenues underpinning the Budget assume that Rosebank will be given the go-ahead, despite Cabinet splits on the issue WHAT ISN'T IN IT * Healey has rejected calls from colleagues to increase Capital Gains Tax amid concerns that doing so would damage growth and end up reducing tax revenues * Major welfare reform will wait until after the Milburn review, which is coming after the Budget. It will require significant upfront investment in employment support * Defence spending - the big decision has been deferred until the spending review, expected in Autumn 2027