Healey vows ‘breathing space’ for consumers and businesses in first budget

UK Chancellor of the Exchequer John Healey has said his first budget, due in two weeks, will offer consumers and businesses a “breathing space” without breaking the Labour government’s fiscal rules. He made the comments to journalists in Bangkok, where he is attending the annual meetings of the International Monetary Fund (IMF). The budget will be delivered on 28 October.

Energy support

The government has already cut VAT on electricity bills. Healey is expected to announce a further energy support package, ahead of an anticipated sharp rise in the energy price cap in January. He noted that the prime minister has spoken of recognising the cost of doing business, not only the cost of living.

Spending limits

Healey reiterated that he will stick to the spending plans set by his predecessor, Rachel Reeves, at last year’s spending review. Cabinet colleagues needing extra money for new initiatives must find it within existing budgets by reprioritising.

The IMF has this week praised the UK for setting out a plan to tackle its deficit, and its managing director, Kristalina Georgieva, urged the government to “stay the course”. Healey said the fiscal rules will be met.

He declined to say whether he would raise taxes on banks or increase capital gains tax. In his view, speculation before previous budgets was damaging: some people cashed in pensions early, while others held back from investing in their businesses.

Support for Ukraine

Healey, a former defence secretary, hinted that he is working on an additional package of support for Ukraine, which could be announced in the budget. He said he is looking at military, diplomatic and economic measures, pointing to Vladimir Putin’s strikes on Ukrainian energy systems that have left thousands without power as a harsh winter approaches.

On Thursday morning, Healey and Bank of England governor Andrew Bailey chaired a meeting of G20 policymakers; US Treasury secretary Scott Bessent was absent. The chancellor is due to fly back to London on Thursday evening to finalise the budget.