Key facts
- UK Treasury officials are exploring options to borrow billions of pounds more.
- The potential borrowing could be used for infrastructure, housing, and business support.
- Changes to fiscal rules in 2024 allow for public sector assets to be considered in debt calculations.
- The Resolution Foundation estimates an additional £9 billion annual investment by 2031 is possible.
- The Chancellor will announce fiscal decisions at upcoming events, not comment on speculation.
Officials at the UK Treasury are reportedly examining ways to increase government borrowing by billions of pounds, utilizing flexibility within the nation's fiscal rules, according to a report by The Times. Finance Minister John Healey indicated there is "scope for more and more rapid investment," with potential funds earmarked for infrastructure, housing, and business support.
These considerations follow changes made by former finance minister Rachel Reeves in 2024, which adjusted Britain's fiscal rules to incorporate public sector assets when assessing government debt levels, thereby opening avenues for increased public borrowing for investment purposes. Analysts suggest that such additional borrowing could be channeled through public agencies, including the British Business Bank, the National Wealth Fund, and the National Housing Bank.
The Times also noted that some funds might be distributed to regional mayors, potentially bolstering Prime Minister Andy Burnham's initiatives to decentralize power from the central government. Burnham himself has previously stated his intention to leverage "any flexibility" within the fiscal rules while maintaining budget discipline.
Investors in British government debt are closely observing for any indications of increased borrowing by the current administration. Long-dated gilt yields remained largely unchanged on Wednesday. The Resolution Foundation think tank has estimated that the government could boost investment by an additional £9 billion annually by 2031, primarily through expanding the scale of the National Wealth Fund.
A spokesperson for the finance ministry stated that Healey is focused on stimulating business growth and assisting with the cost of living nationwide. The spokesperson added that "As has always been the case, the Chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals." Healey is scheduled to present his first budget on October 28.