Key facts
- Chancellor John Healey faces a £35 billion fiscal challenge.
- Inflation rose to 3.5% in September.
- London is the UK's economic engine, with residents paying £5,000 more on average into Treasury coffers than they receive back.
- Banks in the City are braced for a new £2 billion-a-year tax raid.
- Healey is not expected to lower the 'mansion tax' threshold from £2 million to £1.5 million.
- He plans to back the opening of Stratford International Station for cross-Channel rail services.
UK Chancellor John Healey faces a difficult balancing act in the Budget on Wednesday, October 28, as he seeks to raise taxes without damaging London's role as the engine of the UK economy. The scale of the tax hit on the capital will only become clear as the fine details of the Budget emerge. Inflation, fuelled by Donald Trump's war in Iran, rose to 3.5% in September, intensifying financial misery for millions of households. The Institute for Fiscal Studies warned that Healey faces a £35 billion fiscal challenge to avoid cuts to public services. London is the country's economic engine, with residents paying at least £5,000 more on average into Treasury coffers than the city receives back in Government spending. Banks in the City are already braced for a new £2 billion-a-year tax raid. Healey is wary of repeating his predecessor Rachel Reeves's mistakes, who targeted businesses with tax increases. He is not expected to lower the 'mansion tax' threshold from £2 million to £1.5 million and is set to back Lord Sadiq Khan's plan to open up Stratford International Station for cross-Channel rail services.