After 100 days as U.K. finance minister, John Healey is preparing his first budget in secrecy, limiting the speculation that marked his predecessor Rachel Reeves’s budgets. The fiscal headroom, estimated at 24 billion pounds last year, has been reduced to as little as 10 billion pounds by higher government borrowing costs, leaving the government with little room to fund spending commitments. Defense, where spending must reach 3% of GDP by the end of the decade, is the biggest challenge, while tax cuts for fuel, pubs and small retailers remain under consideration. The government also plans to provide 20.4 billion pounds to the National Wealth Fund and the British Business Bank and to devolve more tax and spending powers to local authorities. Bond investors, who want spending cuts, lower borrowing and measures to boost growth, are likely to be disappointed.
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