Labour unease grows over Healey’s cautious budget approach as bond yields surge
Senior Labour figures are privately uneasy about John Healey’s handling of his first budget, worrying that a thin policy pitch could jar with markets already
Senior Labour figures are privately uneasy about John Healey’s handling of his first budget, worrying that a thin policy pitch could jar with markets already on edge. The concern is simple: a weak signal now could invite another shock later.
That anxiety has sharpened as global borrowing costs climb and energy prices keep rising, with Donald Trump’s war with Iran adding more strain to already volatile markets. The pressure is feeding straight into the UK economy. On Thursday, the yield on 30-year UK government bonds hit 6% for the first time since 1998.
Markets are already tightening the screws
The bond move matters because it lifts the government’s cost of borrowing, just as chancellor John Healey prepares a budget that will be watched closely at home and abroad. Barclays also raised some of its mortgage rates for the second time in a week, a sign that the turbulence is already reaching households.
That leaves Healey facing a difficult balancing act. He must reassure investors without spooking them, while also convincing Labour MPs and members that the budget has a clear plan for growth.
Labour members heard one message in Liverpool
Healey’s party conference speech in Liverpool, which centred on reindustrialisation, was warmly received by Labour members. But some government insiders and other Labour figures said the speech left too many questions unanswered.
They pointed to the lack of detail on investment and growth policy. They also questioned whether Healey had done enough to prepare the ground for possible tax rises. That silence, they fear, could feed uncertainty just when markets are already jumpy.
Pressure before the budget lands
One senior Labour politician said: “I missed any real sense of growth.” The remark captures the unease now circulating inside the party, where some want a sharper economic message before the budget is set out.
For Healey, the stakes are high. The 30-year gilt yield touching 6% for the first time in 28 years has underlined how quickly global volatility can reach Britain’s finances. The next move from the Treasury will be watched just as closely as the markets that have already turned.
Source: theguardian.com