Healey urged to be bold on borrowing in first test of Burnham’s growth pledge
Summary
New UK Chancellor John Healey is preparing his first budget and wants to increase government investment without breaking fiscal rules set by the Treasury. Economists are encouraging him to use available borrowing flexibility to fund projects like infrastructure and housing to support economic growth.Key Facts
- John Healey is the new UK Chancellor of the Exchequer.
- He faces costs such as a VAT cut on energy bills and a £5 billion gap in defense spending.
- Healey may fund these either through tax changes or budget cuts in other departments.
- The Treasury’s fiscal rules limit government borrowing, but recent changes allow more borrowing if money is used to buy financial assets.
- Economists suggest public financial institutions could borrow an extra £9 billion yearly without breaking the rules.
- There are calls to use fiscal rules more creatively to increase investment in infrastructure and housing.
- Some experts warn that sticking to fiscal rules is important for credibility and caution about the impact of increased debt.
- Proposals include creating new agencies to decide which infrastructure projects to fund and allowing public corporations to borrow directly.
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