The Bank has separately warned that inflation could exceed four per cent early next year, raising the possibility of further interest rate increases.
Underlying price pressures are also expected to persist. The IMF forecasts that core inflation, which excludes volatile items such as food and energy, will not return to target until late 2027.
Mr Healey faces pressure to explain how he will fund public services and meet the Government’s defence commitments.
Economists estimate that he needs to find around £35billion to avoid cuts to public services while delivering the promised defence spending.
The Institute for Fiscal Studies warned this week that the Budget would be a “work of fiction” unless the Chancellor clearly explained how he would cover those costs.
Rising government borrowing costs have made the task harder. Financial markets will be watching for a plan that investors believe is realistic and affordable.
The Office for Budget Responsibility is preparing updated economic forecasts that will guide Mr Healey’s Budget decisions.
In March, the OBR forecast growth of 1.6 per cent for 2027, compared with the IMF’s latest prediction of 1.2 per cent.