Key facts
- UK inflation reached a five-month high of 3.1% in August.
- Prime Minister Andy Burnham stated the economy shows resilience despite inflation concerns.
- Burnham is prepared to make difficult decisions to keep the economy on track.
- Chancellor John Healey aims to prioritize growth and fiscal discipline.
- Healey indicated tax increases are possible in the upcoming Budget.
- The Budget is scheduled for October 28.
UK inflation reached a five-month high of 3.1% in August, a figure Prime Minister Andy Burnham acknowledged as a concern but stated was set against a backdrop of economic resilience. Burnham told reporters he is prepared to make difficult decisions to ensure the economy remains on track.
Chancellor John Healey, in his first major speech as chancellor, emphasized his mission to foster growth and fiscal discipline. He did not rule out tax increases in the upcoming Budget, scheduled for October 28, citing increased government borrowing costs as a pressure on public finances. Healey stated the government is responding to "extreme pressures in the wider market" and aims to "bring down welfare costs."
Sources indicate that Healey is working to fill a £10 billion hole in the public purse, with his headroom reportedly having dropped from £23 billion to £5 billion. The Office for Budget Responsibility is currently assessing the UK economy, which will inform the Chancellor's plans.