{"id":7368,"date":"2026-10-28T20:00:00","date_gmt":"2026-10-28T17:00:00","guid":{"rendered":"https:\/\/mikhailinvest.com\/energy-crisis-shapes-uk-budget-as-chancellor-faces-pressure-over-defence-spendin\/"},"modified":"2026-10-28T20:00:00","modified_gmt":"2026-10-28T17:00:00","slug":"energy-crisis-shapes-uk-budget-as-chancellor-faces-pressure-over-defence-spendin","status":"publish","type":"post","link":"https:\/\/mikhailinvest.com\/zh\/energy-crisis-shapes-uk-budget-as-chancellor-faces-pressure-over-defence-spendin\/","title":{"rendered":"Energy Crisis Shapes UK Budget as Chancellor Faces Pressure Over Defence Spendin"},"content":{"rendered":"

John Healey\u2019s maiden Budget is likely to omit clear plans to boost defence spending, reform taxes and curb the welfare bill, economists have predicted, in a move that would kick \u201ctough decisions into the long grass\u201d.<\/p>\n

Healey<\/a>, who resigned from Sir Keir Starmer\u2019s government over the Treasury\u2019s refusal to set out how it would lift spending on the military to three per cent of GDP by 2030, is expected to delay several major financial decisions until a Spending Review in 2027.\u00a0<\/p>\n

Raising defence spending to three per cent of GDP from a current level of around 2.7 per cent would amount to approximately \u00a311bn more in expenditure each year.\u00a0<\/p>\n

City economists have predicted that the Chancellor will deliver a string of small policy measures to support households and businesses with cost pressures, and maintain a fiscal buffer large enough to avoid spooking the markets.\u00a0<\/p>\n

Pantheon Macroeconomics economists Rob Wood and Elliott Jordan-Doak told clients that they expected the Budget to deliver \u201cless headroom\u201d and \u201ckick tough decisions on defence and other spending into the long grass\u201d, which could push up government borrowing costs further as bond traders fret over the sustainability of the government\u2019s finances.\u00a0<\/p>\n

\u201cAvoiding addressing known spending pressures<\/a> now undercuts the credibility of planned fiscal consolidation,\u201d they said.\u00a0<\/p>\n

\u201cMarkets would need to believe that a government politically unwilling, or unable, to tighten now could deliver even larger consolidation immediately before an election.\u201d<\/p>\n

They warned that the Budget will \u201cfail to account for tens of billions of all but already committed\u201d spending, pointing to the likelihood of public sector pay increases and defence funding coming next year.\u00a0<\/p>\n

Peel Hunt economist Kallum Pickering said the government had also made \u201cno serious commitment to fix either the UK\u2019s distortive tax code or the perverse incentives caused by a bloated welfare system\u201d. He added that Andy Burnham\u2019s government suffered from a \u201ccredibility discount\u201d given Labour\u2019s struggles to rein in spending in the short-term.\u00a0<\/p>\n

Healey\u2019s promise to \u2018get energy costs down for good\u2019<\/strong><\/h2>\n

During Wednesday\u2019s statement, the Chancellor<\/a> is widely expected to deliver short-term aid to households and some businesses through energy subsidies and an extended freeze on fuel duty.\u00a0<\/p>\n

A support package would be aimed at easing pressures from soaring inflation in the early parts of 2027 due to continued trade disruption of crucial supplies across the Gulf region.\u00a0<\/p>\n

In a video message ahead of the statement, Healey said he would preside over a Budget that offered \u201cbreathing space\u201d to businesses and households. He also promised to deliver long-term measures to \u201cget energy costs down for good\u201d and to \u201cstrengthen national security and our defences\u201d.\u00a0<\/p>\n

\u201cWe\u2019ll do all of this responsibly, sticking within tight fiscal rules, and make sure every pound is well invested,\u201d he said.<\/p>\n

Morgan Stanley analyst Bruna Skarica warned that traders could see temporary, one-off measures to support households with cost pressures as permanent, adding that the City would closely monitor the \u201cperceived plausibility of the fiscal plan\u201d.\u00a0<\/p>\n

Heightened scrutiny of financial plans will come just a fortnight after the International Monetary Fund endorsed the UK government\u2019s plans to narrow the deficit over five years.\u00a0<\/p>\n

Spending Review will be \u2018firmer test\u2019 of spending restraint<\/strong><\/h2>\n

City firms have predicted that Healey<\/a> will set his fiscal headroom at around \u00a315bn and raise receipts by about \u00a35bn through a higher banking profit levy and taxes on online retailers.\u00a0<\/p>\n

Next year\u2019s Spending Review could come into greater focus as a result of delayed decisions.\u00a0<\/p>\n

ING economist James Smith said: \u201cIn delaying this process for 12 more months, the Treasury no doubt hopes lower borrowing costs will buy it some extra spending room. But if you\u2019re also thinking of an early election, then a Spending Review is something you\u2019d almost certainly want to do afterwards.\u201d<\/p>\n

Berenberg bank\u2019s Andrew Wishart separately said the review would be a \u201cfirmer test of the government\u2019s resolve to cap spending\u201d.\u00a0<\/p>\n

Reviews on benefits for young people and disability payments are expected to come in the weeks after the Budget, although it is uncertain whether either report will propose welfare spending cuts in the near-term. Prime Minister Andy Burnham has said he wanted to \u201cget the welfare bill down\u201d.\u00a0<\/p>\n

Shadow chancellor Andrew Griffith urged Healey to \u201ctake tough decisions instead of continuing to kick the can down the road\u201d.<\/p>\n

\u201cIf John Healey fudges defence spending rather than properly funding the three per cent by 2030 in his Budget, he must resign,\u201d Griffith said.<\/p>\n

\u201cDefence is the first duty of any government, and we cannot leave our armed forces waiting any longer.\u201d<\/p>\n

\u7ecf\u8fc7 \u57ce\u5e02\u65e9\u62a5<\/a><\/p>\n

\u66f4\u591a\u6765\u81ea Oilprice.com \u7684\u70ed\u95e8\u6587\u7ae0<\/strong><\/p>\n