UK Chancellor Healey Set to Deliver Budget Amid War-Driven Inflation and 3 Trillion Pound Debt
John Healey, who became Chancellor of the Exchequer in July, faces high inflation and rising debt servicing costs as he presents his first budget statement Wednesday.
By Emmanuel Ellis ·
Britain's Chancellor John Healey delivers his first budget statement Wednesday with inflation at 3.5% and national debt above 3 trillion pounds.
Healey took the Treasury job in July following Andy Burnham's appointment as prime minister. The budget arrives as the Iran war has pushed up fuel prices and disrupted supplies through the Strait of Hormuz, driving British inflation to a near one-year high of 3.5%. The Bank of England is expected to raise interest rates in coming months, which would increase the cost of servicing government debt.
The British economy has grown strongly this year, but Healey has limited room to spend. National debt has passed 3 trillion pounds, or about $4 trillion, for the first time, and 8% of government spending now goes toward servicing it. The International Monetary Fund recently approved the direction of the public finances. Healey's predecessor as chancellor, Rachel Reeves, faced the same debt constraint.
Healey has said he will focus on giving businesses and families some breathing space from rising costs, including measures to offset higher energy prices. Burnham has promised to reduce and even end homelessness, improve elderly care, and meet NATO defense spending targets. Funding those pledges would require tax increases or spending cuts. Higher surcharges on bank profits are expected, and higher taxes on the gambling sector are possible.
Bond markets are watching debt levels across Europe, and France has drawn attention after protests exposed the state of its finances. Matthew Amis, an investment director at Aberdeen Investments, said a dull budget could be rewarded by markets with lower borrowing costs. He added that international investors are quick to punish countries with a weak fiscal story.
Defense spending will draw particular attention. Healey quit as defense secretary earlier this year over the lack of money provided for the role, a departure that increased pressure on Keir Starmer before Burnham took office. Healey's budget statement is scheduled for Wednesday in the House of Commons.
Source: WKMG-TV
