The chancellor is seeking to boost confidence in the UK economy while maintaining fiscal discipline amid high borrowing costs, according to BBC economics editor Faisal Islam.
In a major speech at the Coventry Manufacturing and Technology Centre, the chancellor focused on economic growth, industrial policy and investment. The government is attempting to promote what it described as a “new story” for the economy after years of political and economic disruption.
The speech came as 4,000 office-based job losses at Jaguar Land Rover were confirmed. John Healey described the losses as an example of global turbulence and said the UK needed greater resilience.
The chancellor said borrowing costs were too high, with rising bond yields placing pressure on the government’s Budget calculations. At the same time, the government is seeking to protect improving levels of consumer, business and recruiter confidence.
Asked whether the speech was intended to prepare the public for significant tax rises in the October Budget, the chancellor declined to comment. He also did not rule out changes to the state pension’s triple lock, which increases payments annually by the highest of inflation, wage growth or 2.5%.
The government has said it must reduce welfare costs while responding to pressure in financial markets. The chancellor is due to present the Budget on 28 October.
Growth was a central theme of the speech. The chancellor said the UK’s talent and potential could help it become more successful in advanced manufacturing and other sectors.
He also highlighted the potential role of public finance institutions, including the British Business Bank and National Wealth Fund, in supporting strategic investment. One aim is to help create more UK technology companies valued at $1bn or more.
The government is also interested in developing the UK’s artificial-intelligence sector, although the chancellor acknowledged potential effects on jobs and security. He said some degree of public control could be needed to ensure the changes benefited everyone.
The chancellor said long-term economic growth would determine whether the government met its borrowing rules. Islam said the emphasis on growth and investment could limit the scale of any tax rises, although the chancellor has not ruled them out.
