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Healey Faces £35bn Budget Challenge To Meet Spending Pledges. Chancellor John Healey may need to find £35 billion to avoid public spending cuts while meeting the government's defence commitments, according to the Institute for Fiscal Studies. The think tank said higher inflation caused by the Iran war could erode planned spending on public services. It warned Healey could therefore face a choice between spending cuts, tax rises or a combination of both in his first Budget on 28 October. The government has pledged to raise defence spending to 3% of national income by 2030, while also increasing health spending. The IFS said billions of pounds of additional funding would be needed to achieve those commitments without squeezing other departments. IFS director Helen Miller said simply maintaining existing tax and spending plans was not an option, as inflation risked pushing departmental budgets off course.
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