Healey promises Budget 'breathing space' but warns energy bill help will be 'targeted and temporary' only

Chancellor John Healey has signalled that families facing energy bills set to rise by up to 20 per cent in January will get only limited relief in his 28 October Budget, with any help strictly means-tested. Speaking at the IMF annual meetings in Bangkok, Healey vowed to give Britain "a bit of breathing space" while sticking to Labour's fiscal rules and ruling out extra borrowing. The IMF projects the UK's tax burden will hit 41.9 per cent of GDP by the next Parliament, the fastest rise among all G7 nations. Unemployment stands at 4.9 per cent and inflation is climbing for a third consecutive month, piling pressure on a Budget Healey himself calls a reflection of a "tough time."

The IMF projects only France matches Britain for rising tax burdens among G7 nations, while the US and Germany are cutting theirs.

Business chiefs at the CBI are urging Healey to raise the employer National Insurance threshold and strip policy costs from electricity bills, warning further hikes will kill investment.

London office bosses have warned Healey that a mooted £1bn 'office tax' on buildings worth over £500,000 in rateable value risks driving international firms out of the capital.