UK faces ‘very difficult trade-offs’ in budget because of Iran war, say analysts
Summary
A UK thinktank says Prime Minister Andy Burnham will face tough choices in the next budget because high oil prices and inflation from the Iran war are raising costs. The government may need to borrow more money or find new taxes to pay for public services and support programs while managing slower economic growth.Key Facts
- The Iran war has pushed oil prices above $100 a barrel and caused inflation to rise.
- Inflation is expected to reach 3.8% over the next seven months in the UK.
- The UK Chancellor, John Healey, may need an extra £24 billion by 2030 to maintain services and welfare payments.
- The thinktank lowered its estimate of available government spending from £7 billion to about £3 billion.
- UK economic growth is predicted to slow to 1.1% this year and next, losing £28 billion in growth compared to January forecasts.
- The UK’s national debt is nearly £3 trillion, about 95% of the country's yearly income, and may rise if borrowing increases.
- The thinktank advises funding new spending through taxes or savings, not more borrowing, to avoid bigger problems later.
- Proposed government plans include an adult social care system costing £18.5 billion by 2035 and more support for young people not in education or work.
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