John Healey was warned by business chiefs against a £1 billion tax hike on London offices.

Chancellor John Healey is facing tough tax and spend choices for his first Budget

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Mr Healey is said to be considering ramping up property levies for expensive office blocks and skyscrapers, according to The Telegraph.

Under the mooted proposal, business rates for commercial buildings with a rateable value of more than £500,000 would be increased.

Such a tax change, which could raise £1 billion for the Treasury, would inevitably hit London hardest with the Square Mile and Canary Wharf facing the full brunt of it.

The high street, hospitality sector and warehouses may be protected from higher tax.

However, around 9,000 properties in London and the South East could be affected, according to experts.

John Dickie, Chief Executive of BusinessLDN, told The Standard: “London competes globally to attract major businesses and corporate headquarters so hiking taxes on large office buildings risks undermining the UK’s ability to attract international investment.

“Rather than making piecemeal changes, the Government should deliver on its manifesto commitment to replace the business rates system in a way that encourages investment and drives growth.”

Canary Wharf could be hammered by higher taxes on offices

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His words suggests the Treasury may not open its purse to provide extra cash to cover pay rises for doctors and nurses.

Mr Healey has promised to help households and businesses with increased costs, driven up by Donald Trump’s war with Iran, while inflation continues to erode the Government’s spending power and push up borrowing costs.

“It’s a tough time,” he told the BBC.

“People can people can see the global economic conflicts, they know the pressure it’s putting on them, they understand it’s putting pressure on the Government.”

Donald Trump’s Iran war has pushed up inflation, prices at the pump and mortgage rates

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The IMF this week praised the UK for its steps to manage its budget deficit over the long-term, and said Britain was doing a good job at reducing this compared with other countries.

The influential global economics body also said the UK was weathering the impacts of the Middle East conflict better than had been expected, but warned inflation fuelled by the war was likely to get worse before it gets better.

Mr Healey and Prime Minister Andy Burnham have reportedly rebuffed a request by Health Secretary Yvette Cooper for more cash to cover the costs of a pay deal for nurses, and told her to fund it out of the NHS’ existing budget.

This could have an impact on the delivery of frontline services within the NHS.