UK Chancellor Healey vows to prioritise growth while warning spending must be curbed

UK Chancellor John Healey used his first major speech since taking office in July to declare that driving economic growth would be his central mission as he prepares the 28 October budget. Speaking to business leaders at a manufacturing centre in Coventry, he said the government would stick firmly to its fiscal rules, including the target of balancing day-to-day spending with tax receipts by 2029-30.

Against a backdrop of jittery global markets and long-term bond yields that hit an 18-year high last week, Healey argued that stronger growth remains the most sustainable route to balancing the books. Still, he acknowledged the budget would require Labour to be honest about the need to control government spending. Economists have already warned that rising spending pressures, worsened by market turmoil linked to the war in Iran, could force tax rises or spending cuts.

Still paying the "Truss penalty"

Healey said Britain continues to feel the effects of Liz Truss's disastrous mini-budget nearly four years on, which triggered turmoil in UK government bond markets at the time. He said maintaining fiscal discipline matters in an uncertain, volatile world, as it makes decisions harder both for government and for businesses considering investment.

The speech came as Labour faces scrutiny over Andy Burnham's tax and spending priorities, and as Jaguar Land Rover, headquartered near the speech's venue, announced plans to cut 4,000 jobs. Healey confirmed he intends to honour Labour's manifesto pledge not to raise taxes on working people, but signalled the government is looking for savings in the welfare budget by tackling youth unemployment. He pointed to an upcoming review by former minister Alan Milburn on youth worklessness, describing both a moral and fiscal duty to help young people return to work.

Healey also said the budget would set out a roadmap for further devolution of tax and spending powers to regional mayors, including letting them retain a share of business rates and income tax.