Healey faces pressure to expand borrowing for infrastructure under Burnham's growth plan

John Healey, the newly appointed chancellor, has just twelve weeks before presenting his inaugural budget and is already tasked with covering Andy Burnham's VAT reduction on energy bills and a £5 billion gap in the defence investment plan left by his predecessor Rachel Reeves. Reeves left a sizeable fiscal “headroom” of £24 billion, and a recent change to how debt is measured means borrowing for financial assets does not count against the Treasury target.

Economists from the Resolution Foundation and the Institute for Fiscal Studies note that public financial institutions could borrow up to an extra £9 billion annually, while others propose that public corporations be permitted to raise money directly from markets. Former Goldman Sachs chief economist Lord Jim O’Neill and policy scholar Thomas Aubrey also see room within the rules for greater infrastructure financing, though Treasury officials warn against unsettling gilt markets. The debate centers on whether the government should push the boundaries of the new rules or stick to the existing framework while justifying any additional investment.