UK Chancellor John Healey is preparing his first budget for Oct. 28 as the Iran war, higher borrowing costs and government spending commitments pressure Britain’s public finances. Prime Minister Andy Burnham’s government is seeking to preserve investor confidence and avoid repeating the large tax increases introduced under former Chancellor Rachel Reeves. Healey inherited £23.6 billion ($31.9 billion) of headroom under the government’s borrowing rule, but higher debt-servicing costs and new commitments have reduced the buffer by about £9 billion. Potential revenue measures include higher taxes on banks and raising or extending beyond 2030 the existing windfall levy on UK oil and gas profits, which already produces a 78% tax rate. Energy executives and politicians warn that further North Sea taxation could weaken investment, accelerate skilled-job losses, undermine energy security and reduce domestic production. The proposal could also lower the value of BP’s planned North Sea business sale, previously expected to reach up to £2.5 billion. Healey is examining whether fiscal rules permit more infrastructure borrowing, while welfare and defense add to spending pressures. Defense spending plans are expected in the 2027 spending review rather than the October budget, and Healey has not publicly committed to raising defense spending to 3% of GDP by 2030 from about 2.6% currently, a move requiring at least another £10 billion.