In June, John Healey resigned as Defence Secretary because he believed the financial settlement underpinning the proposed Defence Investment Plan fell well short of what was required.

Now, as Chancellor, he must balance the case for greater defence expenditure against the wider pressures on the public finances.

When John Healey delivers his Budget on 28 October, the figure most experts will look for is the headroom. It will be the first formal test of the government's fiscal rules since last November, with the OBR now only assessing them once a year. What is fiscal headroom and why does it move around so much?

Over the coming weeks and ahead of John Healey’s first Budget on the 28th of October we are publishing a series of briefings from our in-house experts to help organisations to understand the Budget process and the key factors influencing the Chancellor’s decisions.

This first briefing looks at the bond market and how it is already making the situation more difficult for the Chancellor.