Healey’s growth agenda meets fiscal reality

Healey’s growth agenda meets fiscal reality

In his first major speech, Chancellor John Healey today set out optimistic plans to drive economic growth across ‘every postcode’ in the UK. Taking a more positive approach than his predecessor, Healey said the UK was ‘turning a corner’, pointing to signs of growth and previous cuts to interest rates. 

Yet the speech was delivered against a challenging backdrop of rising government debt, low fiscal headroom, rising government bond yields and the confirmation by Jaguar Land Rover today that it plans to cut 4,000 jobs from its UK workforce.

Speaking at a manufacturing plant in the West Midlands, Healey said fiscal discipline was his ‘first priority’. Pointing to the fact that around £1 in every £10 of government spending goes on servicing debt, he added that he was “committed to controlling borrowing, bearing down on inflation and reducing the long-term pressure on the UK’s public finances”.

Fiscal devolution from central government, with more control being given to local authorities to drive local growth, is a cornerstone of the new approach announced today.

Healey pledged to set out the full roadmap to devolution at the Autumn Budget which takes place in just seven weeks. However, he said it would include greater business rates retention for local authorities.

There was a clear northern focus, including a new £150 million allocation from the British Business Bank to support scale-ups in northern England. Meanwhile, the government will establish the Northern 500 network – a group of the most ambitious mid-sized northern businesses which will be supported by local mayors to drive economic growth.

Healey also committed to reducing pressures on businesses by cutting business regulations and their associated costs by 25% by the end of this parliament (2029). The government suggests this could save businesses £450 million annually.

Hetal Mehta, St. James’s Place Chief Economist, says: “Chancellor Healey talked about adhering to fiscal discipline while also wanting to boost growth. Though the devolution theme remains very strong in the narrative, details are still light at this stage – deliberately so. Healey’s refusal to engage in speculation on individual measures is welcome, though no doubt market participants will be poring over the options in the coming weeks.”

SJP Approved 07/09/2026