Brief
IFS warns Healey’s budget could become “work of fiction” without credible spending plan
The IFS says the upcoming UK budget must address £35bn of spending pressures or risk being seen as unrealistic, amid higher borrowing costs from the Middle‑East war.
By Felo News Desk · Published
John Healey faces criticism from the Institute for Fiscal Studies (IFS) that his October 28 budget could become a “work of fiction” unless he presents a credible plan to meet £35 billion of spending pressures, the think‑tank said on Wednesday.
What happened
The IFS released its “green budget” analysis ahead of Healey’s speech to the Commons, warning that higher inflation linked to the war in the Middle East will force the chancellor either to top up existing spending programmes or to impose deep real‑terms cuts before the end of the decade. The institute said the damage from higher inflation means the Treasury’s £24 billion buffer, left by former chancellor Rachel Reeves, could be halved by rising borrowing costs.
What the reports add
Helen Miller, director of the IFS, told the Guardian that “simply pencilling in implicit cuts that he has no intention of delivering would make the budget a work of fiction.” She added that the think‑tank’s report urges Healey to avoid a “steady as she goes” approach that delays decisions until the next spending review. The IFS also warned that assuming “everything can be kicked forward” to the following year would undermine the chancellor’s credibility with financial markets.
What was said
“If John Healey sets out spending envelopes for public services that he would not be willing to live within, his plan for meeting the fiscal rules will not be credible,” the IFS wrote. The institute echoed a recent comment from Bank of England governor Andrew Bailey that fiscal policy “must be credible and be seen as such by financial markets.” The following day, the Times quoted a government source saying, “Andrew Bailey needs to focus on doing his job.”
How it came about
The IFS analysis follows weeks of pressure on the Treasury as bond markets react to the Iran‑related war, eroding the £24 billion fiscal headroom recorded in a September 21 Felo News piece. Earlier this week, Felo reported that Conservatives urged Healey not to raise taxes, while the Treasury’s own projections show headroom shrinking to about £12 billion. The IFS warning adds to that narrative, highlighting the risk that the budget could be perceived as unrealistic if it fails to address the £35 billion gap.
Key facts
- The Institute for Fiscal Studies says the budget risks being a "work of fiction" without a credible plan for £35bn spending pressures. (theguardian.com)
- Higher inflation linked to the Middle East war could erase about half of the £24bn fiscal buffer left by former chancellor Rachel Reeves. (theguardian.com)
- IFS director Helen Miller warned that assuming spending can be postponed to next year would undermine the chancellor's credibility. (theguardian.com)
- Bank of England governor Andrew Bailey said fiscal policy must be credible and seen as such by financial markets. (theguardian.com)
- The Times quoted a government source saying Andrew Bailey needs to focus on doing his job. (theguardian.com)
Sources
- [1] theguardian.com — originally reported as “IFS: budget will be ‘work of fiction’ without clear plan to cover UK spending pressures”
