London (AFP) – Britain’s new finance minister John Healey on Monday pledged to maintain the Labour government’s strict fiscal discipline in his upcoming budget, after governments worldwide were hit by spiking 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 former defence minister Healey to the top Treasury position.
“The prime minister and I are in lockstep in our commitment to meeting the fiscal rules at the upcoming budget” on October 28, Healey said as he delivered a speech at a manufacturing facility in the city of Coventry, central England. Addressing an audience featuring government ministers — but not Burnham — business leaders, apprentices, and journalists, the chancellor would not be drawn on whether taxes would need to rise to help reduce Britain’s debt pile. He has previously committed to following the fiscal rules laid out by his predecessor Rachel Reeves, which states that day-to-day spending must balance with government tax receipts.
At the same time, Healey on Monday 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 his speech unfolded, British luxury carmaker Jaguar Land Rover announced it planned to cut 4,000 jobs over the next two years — with most expected in the West Midlands region where Healey was speaking. Focusing in particular on the “scar” of high youth unemployment, Healey said it was a “moral duty” to tackle the issue. He also addressed a need to combat the high cost of living affecting tens of millions of Britons, recently made worse by energy prices surging on the US-Iran war.
Rising inflation has played a part in pushing yields on government bonds to the highest levels in decades, while consumers and borrowers are expected to soon face interest-rate rises from central banks. Alongside Healey’s speech, the British government on Monday said it planned to cut red tape while providing a £150-million ($200 million) fund to boost business innovation in northern England. This was in line with Burnham’s aim to devolve economic and political power to regions outside London.
Since entering government in July, Burnham has offered the British public some low-cost sweeteners, including cheaper bus fares and a tax cut on electricity bills. He has additionally eased a tax on pubs and other hospitality venues. Sceptics argue that the financial constraints mean Burnham and Healey will struggle to find the wiggle room to fund bigger commitments, including greater public control of utilities, ending rough sleeping, and plugging a huge gap in defence spending. Healey had resigned as defence minister under Starmer, accusing the Treasury of insufficient military funding.
© 2024 AFP
