UK finance minister Healey set to pay for budget measures without more borrowing, FT reports

UK Finance Minister John Healey is expected to pay for new initiatives in this month’s budget, including a cost-of-living package, with higher taxes or spending cuts rather than more borrowing, the Financial Times reported on Wednesday. Healey’s first annual budget on October 28 will be “scorecard positive” in 2029/30, the final year of the parliament, meaning that the additional discretionary spending is fully funded, the newspaper said, citing people briefed on the budget preparations. The government’s self-imposed borrowing rules state that day-to-day spending must be met by tax revenues with debt falling as a share of GDP. The country had a budget deficit of 4.4% of GDP last year. The Iran war has put additional pressure on Britain’s public finances and left Healey with less headroom after meeting the fiscal rules, the report said. The finance minister is expected to let the headroom act as a “contingency fund” for times of economic stress, the paper said. “This will be the chancellor’s way of demonstrating fiscal responsibility,” one person briefed on the budget told the FT. Besides a targeted package to help with higher winter fuel bills, Healey is expected to drop plans to increase fuel duty by 3 pence ($0.3982) a litre in January and 2 pence in March, according to the report. “The Chancellor has been clear that fiscal discipline underwrites every promise this Government makes, which is why he and the Prime Minister are in lockstep on meeting the fiscal rules,” a Treasury spokesperson said in a statement. “His focus is on backing British jobs, giving families and businesses breathing space and driving growth in every postcode.” The IMF this week backed Britain’s fiscal strategy, urging it to “stay the course” rather than accelerate deficit reduction, drawing a contrast with other big economies that have little or no plans to reduce borrowing at a time of rising interest rates.