John Healey issued major economic warning as Budget looms

John Healey issued major economic warning as Budget looms The Chancellor will give his maiden Budget on October 28. Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments By Steph Spyro , Deputy political editor and environment editor 09:29, Tue, Oct 13, 2026 Updated: 09:30, Tue, Oct 13, 2026 John Healey (Image: Getty) John Healey has been warned against dishing out state handouts at his upcoming Budget to ease cost-of-living pressures. The International Monetary Fund (IMF) downgraded its outlook for UK growth and warned of further price rises and job losses. The fund said that an “urgent” need to reduce borrowing meant that help with the cost-of-living crisis should be used “sparingly” in all countries. Any measures must be “well funded” to maintain credibility, it added. Article continues below ADVERTISEMENT “Any new spending increases or tax cuts should be well-funded to secure the necessary fiscal adjustment paths,” the IMF said in its latest world economic outlook on Tuesday. Fiscal support measures should be used sparingly, designed in a way not to complicate the task of monetary policy, and unwound rapidly as the shock dissipates.” UK households are also set to face a sharper rise in inflation than previously forecast as the conflict in the Middle East propels food and energy costs higher. Consumer prices are set to increase by 3.3% in 2026, up from a previous prediction of 3.2%. This would mark the joint second-highest rate among the G7 group of countries. Get personal finance news, money saving tips and advice plus selcted offers and competitions I would like to receive emails from the Daily Express featuring our latest products, services, offers, and promotions from across the Reach Plc family . Subscribe Invalid email You agree you are 18 or over. We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. You can unsubscribe at any time. More Info . Andy Burnham dealt huge blow in nightmare poll for PM Andy Burnham completely skewered over Brexit in Commons showdown Meanwhile, inflation is expected to slow to 2.8% for next year, but this is significantly higher than the 2.4% rate previously forecast by the IMF. Article continues below ADVERTISEMENT The Bank of England has said it expects UK inflation to rise to “slightly above 4%” in the first quarter of 2027, partly linked to another increase in the household energy price cap in January. Article continues below ADVERTISEMENT However, inflation is then expected to swing back lower throughout the year. The IMF said it expects core UK inflation to fall back to target levels by the end of this year, later than it had previously forecast. UK gross domestic product (GDP) is set to grow 1.3% this year, having previously predicted a 1% rise. But growth for next year is set to slow to 1.2%, down from a previous forecast of 1.3%. Mr Healey and Prime Minister Andy Burnham are under pressure to ease the cost of living at their maiden Budget on October 28. Mr Healey said: “Conflict in the Middle East and Europe is hitting people in the UK and around the world. “But Britain’s economy is showing strong international resilience in the face of these challenges: we’re forecast to be the joint second fastest-growing G7 nation in 2026 and have the lowest deficit in the G7 by 2031. “This week I will meet international finance ministers in Bangkok to discuss how we limit the impact of the conflicts on people and businesses, while maintaining strong fiscal discipline. “We are determined to drive good growth in every postcode, provide some breathing space for today, and fresh hope for the future.” Shadow Chancellor Andrew Griffith said: “John Healey must tackle both problems in the Budget by getting Britain drilling and dealing with out-of-control welfare spending. “If the Chancellor reaches for more tax rises instead, he is choosing slower growth and working people will pay for it.” Inflation John Healey Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments