Healey may fund budget through taxes or spending cuts — Cyprus Mail

In the United Kingdom, Finance Minister John Healey may fund new budget measures through tax increases or spending cuts rather than new government borrowing, according to the Financial Times. Cyprus Mail reports.

Budget plans

The budget that Healey is due to present on October 28 may include new initiatives, including a support package in response to the rising cost of living. According to the Financial Times, the budget in 2029–2030, the final year of parliament's term, must be fully funded. This means that additional discretionary spending is planned to be covered by identified funding sources.

British fiscal rules stipulate that current spending must be covered by tax revenues, while public debt must decline as a share of gross domestic product. Last year, the country's budget deficit stood at 4.4% of GDP.

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Headroom and fuel duty

According to the Financial Times, the war with Iran has increased pressure on the United Kingdom's public finances and reduced the headroom available after meeting fiscal rules. Healey is expected to retain this headroom as a reserve in case of economic stress.

According to the publication, the minister may also abandon plans to raise fuel duty by 3 pence per litre in January and by another 2 pence in March. In addition, a targeted assistance package is expected in response to rising winter fuel costs.

A spokesperson for the UK Treasury said the government is focused on complying with fiscal rules, supporting jobs, families and businesses, and stimulating economic growth. The International Monetary Fund this week backed the UK's fiscal strategy and called for deficit reduction not to be accelerated.