Bloomberg前瞻：英国财相Healey获IMF财政纪律肯定，10月28日首份预算案面临考验，银行附加税利空已被消化

Britain received unexpected praise for its fiscal restraint at the International Monetary Fund’s annual meetings in Bangkok this week. While welcome, the fund’s support puts an even brighter spotlight on Chancellor of the Exchequer John Healey ahead of his debut budget in two weeks’ time.

The IMF upgraded UK growth forecasts and drew attention to the country’s consolidation plans — faster than any other Group-of-Seven peer — over the next five years.

“The UK is actually one country where action to reduce debt and deficit has been taken,” said the fund’s director general Kristalina Georgieva. “We see the UK in that sense enjoying a bit of better growth.”

Healey was in Bangkok to receive the IMF’s approval first hand. As well as Georgieva, the fund’s chief economist Silvana Tenreyro, a former Bank of England rate-setter, also said the UK’s deficit reduction “stands out” among G7 economies.

The kind words were noticed back in Britain — including at an event with Nobel Prize-winning economist Paul Krugmanin Oxford, where former chancellor of the Exchequer Rachel Reeves rose from the audience and cited the IMF’s observations while speaking up for her record. Reeves’ intervention amused the learned gathering, but the serious question of Britain’s economic standing now rests with her successor.

“Let’s see what happens in two weeks,” said Jason Windsor, chief executive of Aberdeen Group, in reference to Healey’s budget. “We want the UK to be seen as a stable, quality, well-governed place to invest. Improving that will allow more investment in our companies. We need a measured budget that doesn’t isolate business and is good for growth.”

On Oct. 28, Healey has the chance to deliver yet faces pressure from Labour politicians who want higher government spending, while Prime Minister Andy Burnham is determined to ease the cost of living for millions of voters. Reeves’ budgets in 2024 and 2025 have already raised taxes by £66 billion.

With higher revenues needed, Healey has submitted plans for anincrease in the surcharge on banks. The extra tax could raise £3 billion a year, according to Bloomberg Intelligence. The news knocked around 3% off UK bank share prices and dealt a blow to the hopes of financiers at the IMF and Institute of International Finance meetings. Several had already warned that taxes on banks or capital gains, another potential target, were not the right signal to be sending.

Read More: UK Banks Warn of £6 Billion Economy Hit From Healey Tax Plan

Those opinions were reflected by Helge Berger, the deputy director of the IMF’s European department. On Friday, he urged Healey to cut spending instead of taxing banks. Taxes are “historically for Britain, a high number” and more tax rises will be “less productive,” Berger said. Pension and welfare reform were “where we would put the emphasis rather than on the tax that you mentioned,” he told reporters.

The chancellor’s challenge at the budget will be to deliver the fiscal discipline the IMF is demanding without damaging growth or investment.

It won’t be easy. The cushion against Healey’s main fiscal rule — which says day-to-day spending must be covered by tax in 2029-30 — is estimated to have shrunk to £10-20 billion from £24 billion in March. He will have to raise tax or find savings to fill the hole.

Speaking to reporters in Bangkok, he said departments will need to “manage what they’ve got.”

Still, if the chancellor can deliver a small, well-targeted budget, a big potential reward awaits in lower borrowing costs. Britain pays the highest rates on its benchmark debt in the G7, a hangover that still lingers from the Liz Truss crisis of 2022 despite the efforts of subsequent chancellors starting with Jeremy Hunt.

Britain’s annual debt interest spending is £110 billion and rising to £140 billion by the end of the decade, the Office for Budget Responsibility estimates. The size of the bill means that even modest savings would make a difference. The National Institute of Economic and Social Research think tank reckons every percentage point of credible improvement in the deficit lowers 10-year gilt yields by 10–15 basis points and saves £3-4.5 billion a year.

The IMF urged Healey to “stay the course” and make sure borrowing falls in every year of the OBR forecast — not just at the horizon. Asked in Bangkok if he would follow the recommendation, the chancellor refused to say.