John Healey presented his first Budget as Chancellor of the Exchequer on Wednesday, pledging to ease the cost-of-living pressures facing British households while offering targeted support to businesses and workers amid global economic uncertainty.

Describing it as a Budget “for the working people”, Healey said the government would combine immediate relief with longer-term economic reforms, as the Middle East conflict and Russia’s invasion of Ukraine continued to fuel uncertainty and push up costs for families and businesses.

“This is a budget for the working people of Britain, for British businesses, big and small, delivered at a time when global uncertainties and pressures are swirling worldwide and hitting people here at home. A budget built on fiscal discipline, which matches immediate action today, with clear direction for the future,” he said.

“It is a Budget that will deliver breathing space today, and fresh hope for the future,” the Budget statement said, adding that the government was responding to “global economic storms” with immediate measures and structural changes.

Britain’s 10-year government bond yield was down 2 basis ⁠points on the day at around 5.32%, while the 30-year yield was down 4.5 bps at around 5.70%, as prices rose.

The FTSE 100 was up about 0.1%.

The ​pound was down 0.1% to $1.3295 ​after earlier hitting a 1-1/2-week ⁠low. It was down 0.2% against the euro at 83.75 pence.

“John Healey’s first budget as Chancellor of the Exchequer went pretty much as expected. Most of the key decisions had been well flagged in advance, and what hadn’t was of little interest to traders,” wrote David Morrison, senior market analyst at Trade Nation.

“Sterling was unmoved as were Gilts. Only the banking sector showed any significant movement. Investors covered some of their shorts as there was relief that the extra taxes imposed were at the lower end of expectations and potentially time-limited. But it’s worth bearing in mind that UK bank stocks have sold off sharply since the summer, and today’s bounce hardly registers as a recovery, only a mild rebound.”

£100 energy payment for households

Reducing household energy costs was among the central measures in the Budget.

The government extended the VAT cut on electricity until July 2027, a move expected to reduce the annual Ofgem price cap by around £50 in April 2027.

Healey also announced a £2.6 billion Household Energy Payment scheme, under which eligible households in England in council tax bands A to D will receive £100 directly into their bank accounts from January 2027.

The scheme is expected to support up to 20 million households.

“Let me say this to families at home. I know that with the conflict in the Middle East, rising energy bills are a real worry. I know that people look to government at times like this, not to solve all their problems, but to give them a bit of breathing space. So today I’m taking one further step this winter. For 20 million households in council tax bands A to D, I’m announcing a £100 energy payment for households,” he said.

The government will also introduce an Energy Debt Circuit Breaker aimed at tackling accumulated energy debt, with estimated savings of around £30 per billpayer by 2030.

Fuel duty frozen and wages increased

Fuel duty will remain frozen for a 16th consecutive year, continuing a policy that has been repeatedly extended despite previous forecasts anticipating future increases.

The Budget also raises the National Living Wage and National Minimum Wage rates by 3.9%.

The National Living Wage will rise to £13.21 an hour, while the minimum wage for workers aged 18 to 20 will increase to £11.27.

Healey announced an increase in the tax-free mileage rate for people who use their own vehicles for work, from 25p to 30p per mile.

The government will also expand parental pay, extending eligibility to self-employed fathers and partners for the first time.

The Budget includes a new Pension Tax Allowance intended to ensure that pensioners whose incomes are at or below the full new State Pension do not become liable for income tax solely because of State Pension increases during the current Parliament.

To ease grocery costs, the government will remove import tariffs on more than 100 products, including baked beans, chocolate and gherkins.

The measure could save households up to £21 a year, according to the government.

Support for manufacturers and small businesses

The government will introduce the British Industrial Competitiveness Scheme from April 2027, offering electricity discounts of 20% to 25% to around 10,000 energy-intensive manufacturing businesses.

The scheme will also include backdated support for the 2026-27 financial year.

Small businesses will receive additional support through an increase in the threshold for small business rate relief from £12,000 to £18,000.

The change is expected to benefit 70,000 more businesses.

“I’m increasing the threshold for small business rate relief for retail, hospitality and leisure businesses from £12,000 to £18,000. That means 70,000 more businesses. I’m not just cutting their rates and taking them out of paying business rates altogether. That means half of our shops, restaurants and gyms pay no business rates at all. And for all other businesses in these sectors, I will freeze their rates in real terms so that none face an above inflation rise for the next two years,” Healey said.

However, adult gaming centres and vape shops will not qualify for business rates relief.

The government will also target online marketplace sellers to prevent them from circumventing VAT obligations.

Healey said HM Revenue and Customs would receive additional funding to improve tax compliance, alongside stronger powers to collect overdue taxes from those who “can clearly afford to pay but ignore repeated contact”.

New taxes on gambling and banks

The Budget introduces higher taxes on gambling companies, including an increase in Machine Games Duty from 20% to 25%.

The tax applies to net takings from certain gaming machines and will affect operators including Entain, the owner of Ladbrokes, and Evoke, which owns William Hill UK and 888.

Banks will also face an additional 3% surcharge for 15 months from January.

The announcement was one of the measures disclosed ahead of the Budget, although the increase was smaller and shorter-lived than investors had feared.

UK bank shares rallied following the announcement as investors adjusted their expectations for the sector’s tax burden.

Healey confirmed there would be no changes to taxes on employment income or dividend income.

However, the tax on income from property and savings will rise by two percentage points from April 2027.

He also said the government would reduce the threshold for business asset disposal relief in capital gains tax from £1 million to £500,000, while providing “greater upfront relief for new investment”.

Cash ISA allowance retained

The Chancellor reversed the previous plan to reduce the annual tax-free allowance for cash Individual Savings Accounts from £20,000 to £12,000 from April.

“I will not go ahead with the cut to the tax free amount that people can put into a cash Isa. The limit will stay at £20,000 per year, tax free for people of all ages to make investment more accessible,” he said.

The decision preserves the existing annual allowance for savers and avoids the planned reduction in the amount that can be held in cash ISAs without paying tax on returns.

Greater fiscal devolution and regional investment

Healey outlined plans to give local authorities and mayors greater control over revenues and spending as part of what he described as a “radical rewiring of the state”.

The government aims to allow local authorities to retain 100% of business rates revenue by the end of the decade.

From next year, 20% of business rates revenue will go to mayors, while a share of income tax receipts will also be allocated to mayors from 2028.

Mayors and other local authorities will be able to introduce an overnight visitors levy from 2028, creating a potential new source of funding for local services and investment.

The Budget also announced smaller regional investments, including £10 million for a new market hall in Stafford, £10 million for Bristol’s Temple Quarter, £3 million to help young people in Plymouth secure jobs in defence, and £50 million to upgrade Leeds College of Building.

The measures form part of the government’s wider effort to support households and businesses while shifting more fiscal responsibility and resources towards local areas.

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