The Institute for Fiscal Studies (IFS) has cautioned that the war involving Iran poses a substantial risk to Healey's Budget plans, saying the international crisis could undermine the government's spending programme.
In a briefing, the IFS described the conflict as a source of heightened uncertainty for public finances, noting that the disruption outside the UK could complicate the outlook for revenues, costs and the wider economic backdrop on which fiscal plans are based.
Budget-making relies on forecasts of growth, inflation and borrowing costs, the think tank said. Those forecasts can be sensitive to geopolitical shocks, and the IFS warned that policymakers face difficult choices if the international situation materially alters the economic picture.
The warning from the IFS adds to the pressure on officials preparing the Budget, underscoring the challenge of setting multiyear spending commitments in an unstable external environment. The think tank's assessment highlights the potential need for contingency planning and closer monitoring of fiscal risks in the run-up to the budget statement.
The IFS is an independent research organisation known for its analysis of taxation and public spending. Its intervention is likely to sharpen scrutiny of how the government will respond if the conflict's economic consequences begin to affect the domestic fiscal position ahead of the Budget.