On Monday, Britain's new finance minister John Healey pledged to keep the Labour government's strict fiscal discipline in his upcoming budget. This comes after governments around the world faced rising borrowing costs.
In his first keynote speech since becoming chancellor of the exchequer in July, Healey said fiscal discipline was his "first priority." New Prime Minister Andy Burnham, who replaced Keir Starmer over the summer, appointed Healey, a former defence minister, to the top Treasury position.
Healey said, "The prime minister and I are in lockstep in our commitment to meeting the fiscal rules at the upcoming budget" on October 28, during a speech at a manufacturing facility in Coventry, central England. Addressing an audience that included government ministers, business leaders, apprentices and journalists, but not Burnham, the chancellor would not say whether taxes would need to rise to help reduce Britain's debt pile. He has previously committed to following the fiscal rules set by his predecessor Rachel Reeves, which state that day-to-day spending must balance with government tax receipts.
Healey also insisted that the country's "weak" growth trajectory needed to change. "This is essential. It is possible. It is central to my purpose as chancellor," he said. As he spoke, British luxury carmaker Jaguar Land Rover announced plans to cut 4,000 jobs over the next two years, with most expected in the West Midlands region where Healey was speaking.
Focusing on the "scar" of high youth unemployment, Healey called it a "moral duty" to tackle the issue. He also spoke about the need to combat the high cost of living affecting tens of millions of Britons, which has recently been made worse by surging energy prices linked to the US-Iran war. Rising inflation has helped push yields on government bonds to their highest levels in decades, and consumers and borrowers are expected to soon face interest-rate increases from central banks.
Alongside Healey's speech, the British government said on Monday it planned to cut red tape and provide a £150-million ($200 million) fund to boost business innovation in northern England. That aligns with Burnham's aim to devolve economic and political power to regions outside London.
Since taking office in July, Burnham has offered the public some low-cost sweeteners, including cheaper bus fares and a tax cut on electricity bills. He has also eased a tax on pubs and other hospitality venues.
Sceptics argue that financial constraints mean Burnham and Healey will struggle to find room to fund bigger commitments, such as greater public control of utilities, ending rough sleeping, and plugging a huge gap in defence spending. Healey resigned as defence minister under Starmer, accusing the Treasury of providing insufficient military funding.
