John Healey starts by saying that his budget is “delivered at a time when global uncertainties and pressures are swirling worldwide and hitting people here at home”. He said the administration will have a new approach to steer us through global economic storms and give people fresh hope for Britain’s future. He said it is an honour to deliver a budget as chancellor, before paying tribute to Rachel Reeves’s fiscal discipline.
She took the difficult decisions required, he said. Trade tensions are acting as a drag on global economic growth, as is the war in Iran, he said. The UK did not want this war, and it has driven up costs for British families through higher energy costs and higher interest rates.
The UK will spend £14bn more on debt interest this year. Fiscal discipline is his first priority as chancellor, Healey said. Peter Walker, senior political correspondent: A very immediate précis of the main political points of his first budget, with Healey talking up “breathing space” on the cost of living and a break from the Keir Starmer era, but also a mention of the “global uncertainties” which – and he cannot say this – might make his tweaks and changes slightly moot.
This is set out more explicitly with a long section on the Iran war, and a note that the UK did not seek it. Healey said he will meet the fiscal rule that day-to-day spending must be covered by tax receipts, and the investment rule that government debt, defined as public sector net financial liabilities, must be falling as a percentage of GDP in the third year of the forecast. The government will have £15bn of headroom in 2029-30 and £20bn in 2030-31, according to the Office for Budget Responsibility, the government’s forecaster.
Government borrowing will be 4.2% of GDP this year, 3.4% next year, then 2.9%, 2.1% and 1.8% by 2030-31, the OBR said. Predictions of slowing growth were wrong, Healey said. The OBR said GDP will grow by 1.2% this year, 1% next year, 1.6% in 2028, 1.8% in 2029, 1.7% in 2030 and 1.6% in 2031.
In March the OBR had predicted GDP growth of 1.1% in 2026, rising to 1.6% in 2027 and 2028, and dropping to 1.5% in 2029 and 2030. Government debt is forecast to be 83.2% of GDP this year, 83.8% next year then falling to 83.1%, 82.3% and 81.7% in the following years. PW: A statistics-rich part of the speech which is largely for economists and MPs, but Healey is at pains to argue that the government is treating the deficit seriously, which is a key element in trying to shape reaction.
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