Since entering Downing Street in July, John Healey has faced criticism from some business chiefs over an economic vision that seems similar to Rachel Reeves.
But one aspect of running the Treasury has split Healey from his predecessor more than any other: keeping a lid on Budget rumours.
After being appointed Chancellor, City AM can reveal, Healey ordered officials to calculate the cost that pre-Budget speculation on taxes and spending had on the British economy and people’s decisions.
Officials attached a figure to this cost, with the impact for households and businesses running into the billions of pounds, as one Treasury source said. The analysis covered pension pots, financial markets and other crucial investment decisions.
When asked about what’s coming in the Budget, Healey has tended to shake his head, frown and tell reporters that speculation had “real-world impacts”. He said an early Budget on 28 October – a month earlier than last year’s – would help squash the rumour mill, a decision welcomed by a range of key business voices.
It’s a far cry from Budget 2025.
Healey learns from Reeves’ mistakes
Reeves, who is still a sitting MP despite maintaining some distance from Westminster, got dealt a difficult hand. While higher inflation and stronger wage growth figures helped to boost tax receipt projections, her fiscal buffer was all but wiped out by a £16bn productivity growth downgrade by the Office for Budget Responsibility, the fiscal watchdog.
The decision to revise output forecasts, made months before the Budget was delivered, led to a huge split between Treasury policymakers and independent analysts at the OBR. The two months before the Budget led to what has widely been perceived as an exercise in kite-flying, whereby tax ideas are leaked to the media to gauge public opinion and investors’ reactions. Bank stocks and government bond yields yo-yoed as media outlets pumped out new briefings sourced from Whitehall.
Reeves also had herself to blame as her fiscal arithmetic set the conditions for high levels of speculation. Speaking to City AM last year, former OBR official Sir Charlie Bean said was “asking for trouble” by leaving herself with headroom of just £9.9bn at the previous fiscal statement in March 2025. By the autumn, half of that buffer was gone following an embarrassing Labour U-turn on £5bn welfare cuts, regardless of the OBR’s decision to downgrade growth forecasts.
Reeves learned her lesson, building in a headroom against a borrowing target of about £23.6bn. Healey can now partly reap the benefits. Even as the Iran war has put public finances under strain, he is not expected to make significant tax increases given his headroom is estimated at around £12bn as a result of higher borrowing costs and a raft of spending pledges on defence investment and the cost of living.
Nevertheless, Healey has taken every precaution to ensure businesses and families are not pushed to take rash, irreversible decisions such as withdrawing cash from pension pots, selling businesses or overhauling spending plans. It has also been widely reported that the Chancellor has introduced unprecedented security measures to stop Budget leaks, borrowing protocols from his old job at the Ministry of Defence. This has included changing software settings and limiting the number of people who could access documents, according to the Financial Times.
Many City analysts are grateful for the controlled comms operation around this budget. Danni Hewson, head of financial analysis at the investment platform AJ Bell, noted that limited speculation had not dented consumer confidence. Tax advisers have also said that briefings which squashed capital gains tax rumours were welcoming.
Rob Morgan, chief investment analyst at Charles Stanley Direct, said: “Healey ruling out a further increase to capital gains tax will provide some reassurance to business owners and investors ahead of the Autumn Budget.”
An endeavour to keep plans a secret has spoken to Healey’s care for security and discipline. All eyes will be laser-focused on whether he applies these attributes to his administration of public finances and the UK economy.