The Chancellor has warned that the Budget in the autumn could be tough, as US President Donald Trump’s war in the Middle East affects the British economy.

John Healey issued the warning amid the leap in Government borrowing earlier this week, reflecting concerns among lenders about the inflationary impact of the US’s war with Iran.

Mr Healey also told the Financial Times he would ensure the UK emerges from his first Budget on 28 October with a solid “buffer against uncertainty”.

Economists have predicted that the fiscal buffer Rachel Reeves built up in her last budget, through a combination of tax rises and departmental spending cuts, will be squeezed by the inflationary pressures of ongoing global turmoil.

This could limit prime minister Andy Burnham’s ambitions to tackle the cost-of-living crisis, and spending plans across his wider agenda for Government.

The chancellor told the FT: “What’s happening in the Middle East is hitting inflation, it’s hitting growth, it’s hitting borrowing costs.”

He added: “It’s part of a more dangerous world that is more uncertain and it’s one of the challenges we have to meet in this country, but have to meet with other [countries].”

The ​Israeli military said it was striking southern Lebanon early on Sunday ⁠in retaliation for Hezbollah firing two drones at Israeli soldiers stationed in a part ⁠of the ​region ⁠it has declared a security zone.

The Israeli ⁠military had issued ​an ⁠evacuation warning to areas ‌near a building in Arab Salim town in ‌South Lebanon, saying it ‌will strike it as it is used by ⁠Hezbollah.

There was no immediate comment from the Iran-backed group.

On Friday, the Israeli military said it struck weapon storage facilities intended to ‌be used by ​Hezbollah in south Lebanon.

Since 2 ‌March, ⁠Israeli strikes have killed ⁠more than 4,300 people in ‌Lebanon.

From behind the bars of a brutal Iranian prison, a political dissident awaiting execution describes life behind bars – and says the war with the US has made carrying out executions easier for the regime. Alex Croft reports.

A fuel tanker exploded in western Iran, killing 11 people and injuring seven others, state media said.

IRNA reported late Saturday that the tanker hit other cars before bursting into flames near a traffic police station close to the Kurdish city of Sanandaj, some 400 kilometers (248 miles) west of the capital, Tehran. The report cited a faulty brake system.

The injured were transferred to hospitals.

In 2018, a similar road accident between a fuel tanker and an intercity passenger bus near Sanandaj killed 15 people and injured four.

Road and traffic accidents annually leave more than 17,000 dead in Iran. Experts blame the high fatality rate on unsafe vehicles, disregard for traffic rules, and inadequate emergency services.

President Donald Trump has backed up comments from his vice president and insisted the Iran conflict is a relatively minor operation, rather than a full-on war.

“I call it a military conflict because it’s small potatoes for us,” the president told reporters in the Oval Office on Friday. “It’s not a big thing.”

President Trump claimed the U.S. had successfully stopped Iran from getting a nuclear weapon and alleged U.S. satellite intelligence would spot any future threats from the country the moment they arose. The U.S. had “essentially taken over” Iran, the Republican said.

The question of whether the fight is a war has profound implications.

The US aircraft carrier ​Abraham Lincoln left Thailand on Sunday after a five-day port visit, ending a respite from an extended deployment that ⁠included operations in the Middle East, the US Navy said.

“We would like to thank the people of Thailand for their incredible ⁠hospitality,” US Navy Captain ​Dan ⁠Keeler, the Abraham Lincoln’s commanding officer, said in a statement.

Naval deployments ⁠typically last for six to nine ​months, ⁠but during times of ‌conflict that can be extended.

The nuclear-powered Lincoln, with roughly 5,000 personnel, was involved in ‌the U.S. naval blockade ‌and combat operations in the war with Iran and — according to Democratic lawmakers — set a modern-day ⁠record for consecutive days at sea.

Accompanied by other US naval vessels, the Lincoln arrived early on Wednesday in Thailand, the United States’ only treaty partner in mainland Southeast Asia, during a visit that ‌Thai officials said would last five days.

Busloads ​of sailors and Marines wearing ‌civilian clothes, many smiling ⁠and waving, started arriving at ⁠a hotel in the resort city of Pattaya, about ‌150 km (93 ​miles) southeast of Bangkok, ‌shortly after their ships ​docked.

The US and Iran have traded strikes on ships, the latest round of attacks since the conflict flared a week ago after a period of relative calm.

US Central Command, which oversees the nation’s military in the Middle East, said it struck three Iranian oil tankers, including one off the coast of Kharg Island, near the nation’s oil export hub, after Iran’s Islamic Revolutionary Guard Corps launched ballistic missiles at two US Navy ships.

Admiral ⁠Brad Cooper, head of US Central Command, said: “Let the message to the IRGC be clear: If you shoot at two of our ships, we will impose ⁠an even higher economic cost — taking out three of yours.”

The IRGC responded by threatening intensified strikes against US military vessels in the region, and later said it targeted three tankers Tehran that it claimed were on unauthorised routes in the Strait of Hormuz, as well as as three US-linked vessels in other areas.

The exchange of attacks followed an escalation in the past week that threatens to deepen a conflict that has continued since the US and Israel launched strikes on Iran in February.

“Do not be deceived by the ‘terrorist’ U.S. military and refrain from ​any suspicious ⁠movement aimed at passing through unauthorised waterways,” the ‌IRGC Navy said in a statement carried on Iranian state TV. “Otherwise, you will be targeted.”

Tasnim, the semi-official Iranian news agency, had reported that four US missiles hit a tanker in the area of Kharg’s anchorage. Tasnim quoted local sources as ‌saying there were no casualties and the tanker’s crew was being evacuated.

No ‌American personnel were harmed, Central Command said.

The Iranian Red Crescent (IRC) has asked the International Criminal Court to investigate the incident, calling for “an independent, impartial, thorough, and effective investigation” due to the “civilian character of the location”.

Iran has accused the US of “war crimes”, but the US maintains that it does not target civilians.

Below we look at how the attack took place and what both parties have said about it.