Healey warned of the consequences of weak economic forecasts

Sunday 02 November 2025 11:32

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Defense Secretary John Healey has warned there will be “consequences” from recent weaker economic forecasts ahead of the Autumn Budget.

Ministers insisted no final decision had been made on the upcoming Budget, which will be presented by Chancellor Rachel Reeves on November 26.

However, he acknowledged that the Office for Budget Responsibility (OBR) saw worse “damage” to the economy than previously estimated, and that Reeves would “address these challenges”.

The OBR is expected to lower its productivity forecast for the UK at the end of November.

In an interview with Sky’s Trevor Phillips, Healey said: “What we know is they are [OBR] saw extensive damage and far more serious scars than previously thought, a combination of years of cuts, Covid and 14 years of very slow economic growth.

“So there are consequences.

“Things do change, and we will make the necessary announcements to meet those challenges in the Budget.”

The Treasury is seeking to fill an estimated £20 billion fiscal black hole in the public finances, after failed attempts to raise capital, including a U-turn on welfare reform that dashed hopes of £5 billion in savings, and higher borrowing.

Manifesto promises

Despite speculation that Labor could walk back its manifesto promise on tax in the Budget, Healey refused to comment when pressed on whether the Government would increase income tax, national insurance or VAT.

He said: “That’s for the Budget and that’s for the Chancellor to announce at the end of the month.”

However, he insisted that Reeves would stick to his fiscal rule and take steps to ease cost-of-living pressures and “drive stronger economic growth.”

Among the potential tax decisions, on Friday, it was reported that Reeves is reportedly considering a ‘luxury home tax’, bringing expensive homes into a higher tax bracket in an effort to raise money.