UK minister expected to fund budget measures through taxes or spending cuts, FT reports

London, United Kingdom. UK Finance Minister John Healey is expected to use tax increases or spending reductions, rather than additional borrowing, to finance initiatives in this month’s budget, including support for living costs, the Financial Times reported on Wednesday.

Budget funding and fiscal constraints

Citing people briefed on preparations, the newspaper said Healey’s first annual budget, scheduled for October 28, would fully cover the cost of additional discretionary expenditure in 2029/30, parliament’s final year.

Under the government’s own fiscal rules, tax receipts must cover routine expenditure, while debt must decline relative to GDP. Britain recorded a deficit equivalent to 4.4% of GDP last year.

The FT reported that the Iran war had increased pressure on the public finances, reducing the headroom available to Healey after compliance with those rules. He is expected to retain that margin as a reserve for periods of economic stress.

One person briefed on the plans told the newspaper that this approach would demonstrate the chancellor’s fiscal responsibility.

Support for households and fuel duty plans

According to the report, the budget is expected to include targeted assistance with increased winter fuel costs. Healey is also expected to abandon planned fuel duty rises of 3 pence ($0.3982) per litre in January and 2 pence in March.

In a statement, a Treasury spokesperson said the chancellor regarded fiscal discipline as underpinning all government commitments and was aligned with the Prime Minister on complying with the fiscal rules.

The spokesperson said his priorities were supporting British jobs, easing pressure on households and businesses, and promoting growth throughout the country.

IMF backs current strategy

The IMF endorsed Britain’s fiscal approach this week, advising it to maintain its course rather than speed up deficit reduction. It contrasted Britain’s strategy with those of other major economies, which have limited or no plans to cut borrowing despite rising interest rates.