UK government pledges growth with fiscal discipline amid global uncertainty

John Healey has made fiscal discipline his priority, even as he promises to revive Britain's weak economic growth. In his first major economic speech since becoming economy minister in July, Healey said he and Prime Minister Andy Burnham were “totally aligned” on following fiscal rules and controlling debt.

His warning was aimed at those calling for more borrowing to improve public services. “There is nothing progressive” about spending one in every 10 pounds on interest payments, Healey said. Those payments reached about 109 billion pounds in the 2025-26 financial year, equal to 8% of public spending.

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Fiscal discipline is my priority.

Labour's fiscal rules require revenue to cover day-to-day spending and net financial debt to fall gradually as a share of gross domestic product. The rules still allow borrowing to finance public investment. The government is nevertheless facing higher financing costs amid global geopolitical uncertainty, high debt levels and inflation.

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Totally aligned

The yield on Britain's 30-year bond reached 5.89% last week, its highest level since 1998. The 10-year yield reached 5.22%, its highest since 2008. The figures add pressure ahead of the budget scheduled for Oct. 28.

Healey also announced up to 150 million pounds for a British Business Bank fund supporting innovative, fast-growing companies in northern England and aimed at attracting private capital. He previewed a fiscal devolution roadmap for the budget and backed shifting power and resources from London to local authorities to support regional industrial strategies.

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There is nothing progressive

Healey acknowledged that Britain's economic trajectory had been “weak” and pledged to support expansion through greater investment, innovation and employment. The economy grew 1.3% in 2025, then 0.6% in the first quarter and 0.4% in the second quarter of this year, after a prolonged period of low growth following Brexit.

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Weak