UK Chancellor Healey to present first budget under Burnham government

The United Kingdom entered 2026 with a rising cost of living and a growing national debt. Chancellor John Healey will present the government's first autumn budget on Wednesday at 12:30 GMT, outlining tax and spending plans under Prime Minister Andy Burnham.

The announcement comes after UK borrowing broke the 3 trillion pound barrier in September. The country now spends 100 billion pounds annually on servicing that debt. Healey stated the budget aims to move money and power out of Westminster and into local communities across Britain.

Defence spending is a central focus of the statement. Burnham confirmed on Monday that the plan will fully fund the government's defence commitments. A policy paper from June details a 298 billion pound investment to bring the armed forces to warfighting readiness. Britain currently spends 2.6 percent of its gross domestic product on defence, a figure the government plans to raise to 3 percent by 2030 and 3.5 percent by 2035 to meet NATO targets.

The Guardian reported that Healey intends to close a 4.7 billion pound funding gap in the inherited defence plan. The Treasury is reportedly leaning toward changing a 2023 surcharge rate on banks to raise 2 billion pounds. The four largest banks reported profits of 15 billion pounds in the first half of this year.

New taxes on online marketplaces such as Amazon, Temu, and eBay are also expected. The government seeks to collect up to 1 billion pound in unpaid VAT from foreign sellers. Revenue from these measures is expected to help fund business rate cuts for high street shops. Healey is also set to announce a funding boost for mayoralties and local authorities.

Public spending for this year is allocated at approximately 1.42 trillion pounds, with 100 billion pounds going to debt interest. The Office for National Statistics reported that borrowing reached nearly 25 billion pounds last month, driven by higher spending and debt interest costs. Inflation and government borrowing both hit one-year highs last week.

Energy bills are projected to rise by 16 percent in January, reaching nearly 2,000 pounds per year for households. This increase follows the closure of the Strait of Hormuz due to the Middle East conflict. Brent crude futures stood at 115.90 dollars a barrel on Wednesday. The chancellor is expected to announce measures to help households, including scrapping standing charges for energy supply.

Some policy changes have already been announced, such as ending the carers' allowance limit and removing tariffs on food items like chocolate and beans. A new national care service for the elderly is planned to be funded by scrapping the state pension triple lock. A report on the implementation of this service is due in summer 2027.