UK Finance Minister Seeks Brighter Economic Message Ahead of Difficult Budget

• UK finance minister John Healey used his first major speech since taking office to present a more optimistic economic message ahead of a difficult budget that is expected to involve tough tax and spending decisions.
• Speaking at a manufacturing hub in central England, Healey announced plans to give city regions more power to attract private investment as part of Prime Minister Andy Burnham’s devolution agenda. He also reiterated his commitment to fiscal discipline and pledged to reduce regulatory costs by 25% before the next election, due in 2029.
• However, much of Healey’s agenda echoes the priorities of his predecessor, Rachel Reeves, and former prime minister Keir Starmer, including a focus on growth, lower regulation and easing the cost of living.
• Healey’s challenge was underscored during the speech by news that Jaguar Land Rover plans to cut 4,000 jobs worldwide over the next two years. Asked about the threat to employment, he said the announcement showed why the government must broaden growth across Britain rather than rely on a few major economic centres.
• Healey declined to comment on tax plans before his October 28 debut budget. Investors remain concerned about inflation risks from higher oil prices, shrinking fiscal headroom and rising spending commitments.
• Healey and Burnham have pledged to keep the fiscal rules adopted by Starmer and Reeves, including a target to balance day-to-day spending with tax revenues by the end of the decade. However, Burnham’s plans for expanded social care and higher defence spending are likely to keep pressure on Healey to raise additional tax

(Source: Reuters)