UK Treasury offers $130 one-off payment to 20 million households and energy bills relief in face of Iran war shock

British Treasury chief John Healey announced a significant financial package to assist households and businesses amid the ongoing Iran conflict and the resulting economic turmoil. Speaking during his first budget statement, Healey referred to the situation as "global economic storms" and aimed to provide some relief to families and businesses.

The heart of the announcement was a £100 ($133) one-off payment for 20 million lower- and middle-income households, designed to help them cover higher energy bills and rising costs associated with the war. Healey also extended a cut in sales tax on electricity bills and abolished a charge on gas bills. To finance these measures, Healey increased the surcharge on banks' profits, from 3% to 6%, for a 15-month period beginning January.

Additionally, the gambling sector's machine games duty will be raised to help fund the relief efforts. The British economy has been more resilient than initially anticipated, and Healey predicts a 1.2% growth in 2026, despite inflation being higher than expected and likely to remain elevated for some time. Inflation has reached a near one-year high of 3.5%, with the Bank of England expected to raise interest rates soon, further increasing the government's debt servicing costs.

The main challenge for Healey lies in the country's mounting debt, which surpassed £3 trillion ($4 trillion) for the first time, requiring 8% of government spending to service.