Healey to deliver Budget as UK growth beats forecasts, inflation rises
BBC News reports Chancellor John Healey will deliver the Budget on Wednesday, balancing market credibility on borrowing against backbench calls for cost-of-living help.
What you need to know
BBC News reports Chancellor John Healey will deliver the Budget on Wednesday, with UK growth beating forecasts while inflation rose to 3.5% in September and borrowing came in above forecast. Healey must weigh market credibility on borrowing against backbench demands for cost-of-living support.
- BBC News reports the Budget is due on Wednesday, with Healey's aides guarding details through compartmentalised access and codenames to limit speculation.
- The UK grew 0.6% in Q1 and 0.5% in Q2, with Q3 heading for 0.6% to 0.8%, according to the BBC report.
- Inflation rose more than forecast to 3.5% in September, and borrowing numbers were also higher than forecast, BBC News reports.
- The report says Healey must sustain growth, offer cost-of-living help and reassure markets on borrowing.
- Investors are expected to watch the OBR forecast and the Debt Management Office's gilt remit, the report says.
Growth outpaces forecasts as risks build
BBC News reports the UK is the fastest-growing G7 country so far this year, with growth of 0.6% in the first quarter and 0.5% in the second. The third quarter is heading for 0.6% to 0.8%, the report says, defying assumptions of stagnation in the second half.
The BBC report says each quarter has seen growth roughly twice the rate the Office for Budget Responsibility predicted in March, and independent forecasters also underestimated it. The report attributes part of the resilience to reforms weakening the link between gas and electricity prices and to AI and tech investment in the UK.
Clouds remain. The report says inflation rose more than forecast to 3.5% in September and borrowing was higher than forecast, putting an imminent Bank of England rate rise on the cards.
The borrowing judgement
BBC News reports Healey must decide whether to prioritise reassuring markets or answering his backbenchers. Credibility with investors requires the Budget maths to add up, growth plans to be seen as realistic and confidence that MPs will pass the Budget, according to the report.
The report says the essential answer may lie in the OBR's borrowing tables, due when Healey sits down in the Commons around 13:00, and in the market reaction, particularly when the Debt Management Office publishes its gilt remit.
The BBC report says Healey described fiscal discipline and control of public finances as running through the Budget. It adds that some reporting suggests benefits payments for younger people with mental health issues may be cut, with more investment instead directed at getting them into work.
What will markets focus on when Healey delivers the Budget?
BBC News reports investors will watch the OBR's borrowing forecasts and the Debt Management Office's gilt remit, assessing whether the Budget maths add up and whether Healey can reassure markets while meeting backbench demands.
Sources & context
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